Question
Following are forecasts of Target Corporation's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 30, 2016 Reported Horizon
Following are forecasts of Target Corporation's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 30, 2016
| Reported | Horizon Period | Terminal | ||||
|---|---|---|---|---|---|---|
| $ millions | 2016 | 2017 | 2018 | 2019 | 2020 | Period |
| Sales | $74,340 | $75,827 | $77,344 | $78,891 | $80,469 | $81,274 |
| NOPAT | 3,345 | 3,412 | 3,480 | 3,550 | 3,621 | 3,657 |
| NOA | 22,302 | 22,748 | 23,203 | 23,667 | 24,141 | 24,382 |
Answer the following requirements assuming a terminal period growth rate of 1%, a discount rate (WACC) of 6%, common shares outstanding of 602 million, and net nonoperating obligations (NNO) of $8,488 million. a. Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of January 30, 2016.
Instructions:
Round all answers to the nearest whole number, except for discount factors and stock price per share.
Round discount factors to 5 decimal places.
Round stock price per share to two decimal places.
Do not use negative signs with any of your answers.
| Reported | Forecast Horizon | Terminal | |||||
|---|---|---|---|---|---|---|---|
| ($ millions) | 2016 | 2017 | 2018 | 2019 | 2020 | Period | |
| Increase in NOA | Answer
| Answer
| Answer
| Answer
| Answer
| ||
| FCFF (NOPAT - Increase in NOA) | Answer
| Answer
| Answer
| Answer
| Answer
| ||
| Discount factor [1/(1+rw)t] | Answer
| Answer
| Answer
| Answer
| |||
| Present value of horizon FCFF | Answer
| Answer
| Answer
| Answer
| |||
| Cum. present value of horizon FCFF | $Answer
| ||||||
| Present value of terminal FCFF | Answer
| ||||||
| Total firm value | Answer
| ||||||
| NNO | Answer
| ||||||
| Firm equity value | $Answer
| ||||||
| Shares outstanding (millions) | Answer
| ||||||
| Stock price per share | $Answer
| ||||||
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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