Question
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
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