Financial Statement Analysis and Valuation 5th edition-chapter-14: I need help with the below listed problems solutions for the Module 14 -Operating-Income-Based Valuation - Question - E14-19

Following are forecasts of sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 31, 2016, for Walmart Stores Inc.

$ millions Reported 2016 Horizon Period Terminal 2017 2018 2019 2020 Period

Sales. . . . . . . . . . . . . . . . . $482,130 $486,951 $491,821 $496,739 $501,706 $506,723

NOPAT . . . . . . . . . . . . . . . 16,634 17,043 17,214 17,386 17,560 17,735

NOA . . . . . . . . . . . . . . . . . 124,940 126,186 127,448 128,722 130,009 131,309

Answer the following requirements assuming a discount rate (WACC) of 7%, a terminal period growth rate of 1%, common shares outstanding of 3,144 million, nonoperating obligations (NNO) of $41,329 million, and non-controlling interest (NCI) on the balance sheet of $3,065 million.

a) Estimate the value of a share of Walmart common stock using the residual operating income (ROPI) model

as of January 31, 2016.

b) Walmart (WMT) stock closed at $68.80 on March 30, 2016, 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?