Estimating Share Value Using the DCF Model Following are forecasts of Abercrombie & Fitch's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 2 2013. Reported Horizon Period (In millions) 2013 2014 2015 2016 2017 Terminal Period Sales NOPAT NOA $4,511 $4,872 $5,262 $5,683 $6,138 $6,261 242 261 282 305 329 1,446 1,562 1,687 1,821 1,967 336 2007 Answer the following requirements assuming a discount rate (WACC) of 10%, a terminal period growth rate of 2%, common shares outstanding of 78.4 million, and net nonoperating obligations (NNO) of $(372) million (negative NNO reflects net nonoperating assets such as investments rather than net obligations). (a) Estimate the value of a share of Abercrombie & Fitch common stock using the discounted cash flow (DCF) model as of February 2, 2013. Rounding instructions: Round answers to the nearest whole number unless noted otherwise. Use your rounded answers for subsequent calculations. Do not use negative signs with any of your answers. (in millions) Increase in NOA FCFF (NOPAT - Increase in NOA) Discount factor [1/(1+r)] Present value of horizon FCFF Reported 2013 (Round 5 decimal places) Cum present value of horizon FCFF $ Present value of terminal FCFF Total firm value NNO 0 0 Horizon Period 2014 2015 2016 2017 Terminal Period 116 125 134 145 40 145 157 171 183 296 0.9091 0 0 0 0 0 0 Firm equity value S 0 Shares outstanding (millions) Stock price per share $ 0 (Round one decimal place) 0 (Round two decimal places) (b) Assume Abercrombie & Fitch (ANF) stock closed at $45.46 on April 2, 2013, the date the 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? What do you believe are some reasons for the difference? Ostock prices are a function of many factors. It is impossible to speculate on the reasons for the difference. Our stock price estimate is lower than the ANF market price, indicating that we believe that ANF stock is overvalued. Stock prices are a function of expected NOPAT and NOA, as well as the WACC discount rate. Our lower stock price estimate might be due to more pessimistic forecasts or a higher discount rate compared to other investors' and analysts' model assumptions. COur stock price estimate is lower than the ANF market price, indicating that we believe that ANF stock is overvalued. Stock prices are a function of expected NOPAT and NOA, as well as the WACC discount rate. Our lower stock price estimate might be due to more optimistic forecasts or a lower discount rate compared to other investors' and analysts' model assumptions. Our stock price estimate is lower than the ANF market price, indicating that we believe that ANF stock is undervalued. Stock prices are a function of expected NOPAT and NOA, as well as the WACC discount rate. Our lower stock price estimate might be due to more optimistic forecasts or a lower discount rate compared to other investors' and analysts' model assumptions