Forecasting and Estimating Share Value Using the DCF Model Following are the income statement and balance sheet for Intel Corporation.

INTEL CORPORATION Consolidated Statements of Income
Year Ended (In millions)	Dec. 25, 2010	Dec. 26, 2009	Dec. 27, 2008
Net revenue	$ 45,223	$ 35,127	$ 37,586
Cost of sales	15,132	15,566	16,742
Gross margin	30,091	19,561	20,844
Research and development	6,576	5,653	5,722
Marketing, general and administrative	6,309	7,931	5,452
Restructuring and asset impairment charges	--	231	710
Amortization of acquisition-related intangibles	18	35	6
Operating expenses	12,903	13,850	11,890
Operating income	17,188	5,711	8,954
Gains (losses) on equity method investments, net*	117	(147)	(1,380)
Gains (losses) on other equity investments, net	231	(23)	(376)
Interest and other, net	109	163	488
Income before taxes	17,645	5,704	7,686
Provisions for taxes	4,581	1,335	2,394
Net income	$ 13,064	$ 4,369	$ 5,292

*This should be considered as operating income.

INTEL CORPORATION Consolidated Balance Sheets
As of Year-Ended (In millions, except par value)	Dec. 25, 2010	Dec. 26, 2009
Assets
Current assets
Cash and cash equivalents	$ 5,998	$ 3,987
Short-term investments	11,294	5,285
Trading assets	5,093	4,648
Accounts receivables, net	3,167	2,273
Inventories	3,757	2,935
Deferred tax assets	1,888	1,216
Other current assets	1,614	813
Total current assets	32,811	21,157
Property, plant and equipment, net	17,899	17,225
Marketable equity securities	1,008	773
Other long-term investments**	3,026	4,179
Goodwill	4,531	4,421
Other long-term assets	5,111	5,340
Total assets	$64,386	$53,095
Liabilities
Current liabilities
Short-term debt	$38	$172
Accounts payable	2,190	1,883

** These investments are operating assets as they relate to associated companies. (a) Compute Intel's net operating assets (NOA) for year-end 2010. 2010 NOA = $

Answer

0

(b) Compute net operating profit after tax (NOPAT) for 2010, assuming a federal and state statutory tax rate of 37%.

HINT: Gains/losses on equity method investments are considered operating income. Round your answer to the nearest whole number. 2010 NOPAT = $

Answer

12850

(c) Use the parsimonious forecast method, as shown in Analysis Insight box on page 13-4, to forecast Ciscos sales, NOPAT, and NOA for 2011 through 2014 and the terminal period using the following assumptions.

Forecast the terminal period value using the assumptions above and assuming a terminal period growth of: 1%.

* Use sales rounded to nearest whole number for this calculation.

(d) Estimate the value of a share of Intel common stock using the discounted cash flow (DCF) model as of December 25, 2010; assume a discount rate (WACC) of 11%, common shares outstanding of 5,511 million, and net nonoperating obligations (NNO) of $(21,678) million (NNO is negative which means that Intel has net nonoperating investments).

Instructions:

• Use your rounded answers for subsequent calculations
• 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.
• Use a negative sign with your NNO answer.