Question
Forecasting and Estimating Share Value Using the DCF Model Following are the income statement and balance sheet for Intel Corporation. Net revenue $ 44,223 $
Forecasting and Estimating Share Value Using the DCF Model Following are the income statement and balance sheet for Intel Corporation.
Net revenue | $ 44,223 | $ 35,127 | $ 37,586 |
Cost of sales | 15,132 | 15,566 | 16,742 |
Gross margin | 29,091 | 19,561 | 20,844 |
Research and development | 6,576 | 5,653 | 5,722 |
Marketing, general and adminstrative | 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 | 16,188 | 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 | 16,645 | 5,704 | 7,686 |
Provisions for taxes | 4,581 | 1,335 | 2,394 |
Net income | $ 12,064 | $ 4,369 | $ 5,292 |
Assets | ||
Current assets | ||
Cash and cash equivalents | $ 5,498 | $ 3,987 |
Short-term investments | 11,294 | 5,285 |
Trading assets | 5,093 | 4,648 |
Accounts receivables, net | 2,667 | 2,273 |
Inventories | 3,757 | 2,935 |
Deferred tax assets | 1,888 | 1,216 |
Other current assets | 1,614 | 813 |
Total current assets | 31,811 | 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 | $63,386 | $53,095 |
Liabilities | ||
Currnet liabilities | ||
Short-term debt | $38 | $172 |
Accounts payable | 2,190 | 1,883 |
Accrued compensation and benefits | 2,888 | 2,448 |
Accrued advertising | 1,007 | 773 |
Deferred income on shipments to distributors | 622 | 593 |
Other accrued liabilities | 2,482 | 1,722 |
Total current liabilities | 9,227 | 7,591 |
Long-term income taxes payable | 190 | 193 |
Long-term debt | 1,677 | 2,049 |
Long-term deferred tax liabilities | 926 | 555 |
Other long-term liabilities | 1,236 | 1,003 |
Total liabilities | 13,256 | 11,391 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value | -- | -- |
Common stock, $0.001 par value, 10,000 shares authorized; 5,581 issued and 5,511 outstanding and capital in excess of par value | 16,178 | 14,993 |
Accumulated other comprehensive income (loss) | 333 | 393 |
Retained earnings | 33,619 | 26,318 |
Total stockholders' equity | 50,130 | 41,704 |
Total liabilities and stockholders' equity | $ 63,386 | $ 53,095 |
** 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
Incorrect
0.00 points out of 1.00
(b) Compute net operating profit after tax (NOPAT) for 2010, assuming a federal and state statutory tax rate of 37%.(Round your answer to the nearest whole number.)
2010 NOPAT = $
AnswerIncorrect
0.00 points out of 1.00
(c) Forecast Intel's sales, NOPAT, and NOA for years 2011 through 2014 using the following assumptions:
Sales growth | 10% |
Net operating profit margin (NOPM) | 26% |
Net operating asset turnover (NOAT) at fiscal year-end | 1.50 |
Forecast the terminal period value using the assumptions above and assuming a terminal period growth of: 1%.
Sales (rounded two decimal places) | $Answer Incorrect 0.00 points out of 1.00 | $Answer Incorrect 0.00 points out of 1.00 | $Answer Incorrect 0.00 points out of 1.00 | $Answer Incorrect 0.00 points out of 1.00 | $Answer Incorrect 0.00 points out of 1.00 | $Answer Incorrect 0.00 points out of 1.00 |
Sales (rounded nearest whole number) | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 |
NOPAT (rounded nearest whole number)* | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 |
NOA (rounded nearest whole number)* | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 |
* 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 $(21,178) million (NNO is negative which means that Intel has net nonoperating investments). Use your rounded answers for subsequent calculations.
DCF Model | ||||||
Increase in NOA (rounded to nearest whole number) | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | |
FCFF (NOPAT - Increase in NOA) | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | |
Discount factor (rounded to 5 decimal places) | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | ||
Present value of horizon FCFF (rounded to nearest whole number) | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | Answer Incorrect 0.00 points out of 1.00 | ||
Cum present value of horizon FCFF | $Answer Incorrect 0.00 points out of 1.00 | (rounded to nearest whole number) | ||||
Present value of terminal FCFF | Answer Incorrect 0.00 points out of 1.00 | (rounded to nearest whole number) | ||||
Total firm value | Answer Incorrect 0.00 points out of 1.00 | (rounded to nearest whole number) | ||||
Plus negative NNO | Answer Incorrect 0.00 points out of 1.00 | (enter as negative number) | ||||
Firm equity value | $Answer Incorrect 0.00 points out of 1.00 | (rounded to nearest whole number) | ||||
Shares outstanding (millions) | Answer Incorrect 0.00 points out of 1.00 | (rounded to nearest whole number) | ||||
Stock price per share | $Answer Incorrect 0.00 points out of 1.00 | (rounded to two decimal places) |
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