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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

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 $ 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 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 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
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 $ 5,498 $ 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
Current 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 $ 53,09

(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%.

(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.

INTC Reported Forecast Horizon Terminal
($ millions) 2010 2011 Est. 2012 Est. 2013 Est. 2014 Est. Period
Acummulated present value of horizon FCFF $Answer (rounded to nearest whole number)
Present value of terminal FCFF Answer (rounded to nearest whole number)
Total firm value Answer (rounded to nearest whole number)
Plus negative NNO 21178
Firm equity value $Answer (rounded to nearest whole number)
Shares outstanding (millions) 5511
Stock price per share $Answer (rounded to two decimal places)

How to get Present value of terminal FCFF?

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