Estimating Share Value Using the DCF Model

Following are forecasts of Target Corporation's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 30, 2016

Reported Horizon Period Terminal

$ millions 2016 2017 2018 2019 2020 Period

Sales $74,673 $76,166 $77,689 $79,243 $80,828 $81,636

NOPAT 3,360 3,427 3,496 3,566 3,637 3,674

NOA 22,402 22,850 23,307 23,773 24,248 24,491

Answer the following requirements assuming a terminal period growth rate of 1%, a discount rate (WACC) of 6%, common shares outstanding of 602 million, and net nonoperating obligations (NNO) of $8,488 million.

Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of January 30, 2016.

Instructions:

Round all answers to the nearest whole number, except for discount factors and stock price per share.

Round discount factors to 5 decimal places.

Round stock price per share to two decimal places.

Do not use negative signs with any of your answers.

Reported Forecast Horizon Terminal

($ millions) 2016 2017 2018 2019 2020 Period

Increase in NOA

FCFF (NOPAT - Increase in NOA)

Discount factor [1/(1+rw)t]

Present value of horizon FCFF

Cum. present value of horizon FCFF

Present value of terminal FCFF

Total firm value

NNO

Firm equity value

Shares outstanding (millions)

Stock price per share