Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Following are forecasts of sales, NOPAT, NOA as of 12/31/20 for John Deere. Assuming a WACC of 6.5%, terminal growth rate of 1%, common shares

Following are forecasts of sales, NOPAT, NOA as of 12/31/20 for John Deere. Assuming a WACC of 6.5%, terminal growth rate of 1%, common shares outstanding of 145.5M, and NNO of $6.2M

a. Estimate the value of a share of John Deere common stock using the DCF method as of 12/31/20.

b. John Deere stock closed at $425.50 on 2/21/19, the date the 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? What action might you take?

c. Estimate the value of a share of John Deere common stock using the ROPI method as of 12/31/20.

Forecast Horizon
($millions) 2020 Actual 2021 2022 2023 2024 Terminal Period
Sales 54,806 55,629 56,463 57,310 58,169 58,751
NOPAT 2,400 2,448 2,485 2,522 2,560 2,585
NOA 3,883 3,945 4,004 4,065 4,125 4,167

Please help, I do not necessary need the whole answer, just need to understand the steps to take to answer the question

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Empirical Techniques In Finance

Authors: Ramaprasad Bhar, Shigeyuki Hamori

1st Edition

3642064175, 978-3642064173

More Books

Students also viewed these Finance questions

Question

Why does the court disagree?

Answered: 1 week ago

Question

1. Define and explain culture and its impact on your communication

Answered: 1 week ago