Question
Following are forcasts of P&Gs sales, net operating profit after tax (NOPAT), and net operating assets (NOA). We assume a terminal growth rate of 4%
Following are forcasts of P&Gs sales, net operating profit after tax (NOPAT), and net operating assets (NOA). We assume a terminal growth rate of 4%
| HORIZON PERIOD | REPORTED | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| IN MILLIONS | 2013 | 2014 | 2015 | 2016 | 2017 | TERMINAL PERIOD | |||
| SALES GROWTH | 1.5% | 4.0% | 4.0% | 4.0% | 4.0% | ||||
| SALES (UNROUNDED | $84,167 | $85,429.51 ($84,167X1.015) | $88,846.69 ($85,429.51X1.04) | $92400.56 ($88,846.69X1.04) | $96,096.58 ($92,400.56X1.04) | $99,940.44 ($96,09658X1.0) | |||
| SALES (ROUNDED) | $84,167 | $85,430 | $88,847 | $92,401 | $96,097 | $99,940 | |||
| NOPAT | $11,174 | $11,362 | $11,817 | $12,289 | $12,781 | $13,292 | |||
| NOA | $94,305 | $95,989 | $99,828 | $103,821 | $107,974 | $112,292 | |||
Use the forecasts above to compute P&Gs free cash flows to the firm (FCFF) and an estimate of its stock value using the DCF model. Make the following assumptions: discount rate (WACC) of 7 % (Bloomberg estimate as of August 2013), shares outstanding of 2,742.3 million, net nonoperating obligations (NNO) of $25,596 million, and noncontrolling interest (NCI) from the balance sheet of $645 million.
QUESTION
1. What is the Present Value of terminal FCFF?
2. what is the Total Firm Value?
3. what is the NNO?
4. Given the NCI is 645, what is the Firm's equity value?
5. what is the Stock Value per share?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Sustainability Performance And Reporting
Authors: Irene M. Herremans
1st Edition
1951527208, 9781951527204
