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?
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Financial Accounting The Impact On Decision Makers
Authors: Gary A Porter, Curtis L Norton
7th Edition
1439080526, 9781439080528
