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Help me with this please Estimating Share Value Using the ROPI Model Following are forecasts of Target Corporation's sales, net operating profit after tax (NOPAT),
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Estimating Share Value Using the ROPI Model Following are forecasts of Target Corporation's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 2, 2019, which we label fiscal year 2018. Terminal Period $ millions Sales Reported Horizon Period 2018 2019 2020 2021 2022 $75,356 $79,124 $83,080 $87,234 $91,596 3,269 3,402 3,572 3,751 3,939 23,020 24,197 25,407 26,677 28,011 NOPAT $93,428 4,017 28,571 NOA Answer the following requirements assuming a terminal period growth rate of 2%, a discount rate (WACC) of 7.63%, common shares outstanding of 517.8 million, and net nonoperating obligations (NNO) of $11,723 million Estimate the value of a share of Target common stock using the residual operating income (ROPI) model as of February 2, 2019. Instructions: Round all answers to the nearest whole number, except for discount factors, shares outstanding (do not round), and stock price per share. Round discount factors to 5 decimal places. Round stock price per share to two decimal places. Do not use negative signs with any of your answers. Reported 2018 Forecast Horizon 2020 2021 Terminal Period 2019 2022 X X x X X 0.92911 0.86324 0.80205 0.74519 ($ millions) ROPI (NOPAT - [NOABeg x rw]) Discount factor [1/(1+rw)t] Present value of horizon ROPI Cum present value of horizon ROPI $ Present value of terminal ROPI NOA 1,528.92 1,489.76 1,453.67 1,418.5 5,890.85 24,880.6 Total firm value 23,020 53,791.44 11,723 42,068.44 NNO Firm equity value Shares outstanding (millions) Stock price per share 517.8 $ 81.24 Estimating Share Value Using the ROPI Model Following are forecasts of Target Corporation's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 2, 2019, which we label fiscal year 2018. Terminal Period $ millions Sales Reported Horizon Period 2018 2019 2020 2021 2022 $75,356 $79,124 $83,080 $87,234 $91,596 3,269 3,402 3,572 3,751 3,939 23,020 24,197 25,407 26,677 28,011 NOPAT $93,428 4,017 28,571 NOA Answer the following requirements assuming a terminal period growth rate of 2%, a discount rate (WACC) of 7.63%, common shares outstanding of 517.8 million, and net nonoperating obligations (NNO) of $11,723 million Estimate the value of a share of Target common stock using the residual operating income (ROPI) model as of February 2, 2019. Instructions: Round all answers to the nearest whole number, except for discount factors, shares outstanding (do not round), and stock price per share. Round discount factors to 5 decimal places. Round stock price per share to two decimal places. Do not use negative signs with any of your answers. Reported 2018 Forecast Horizon 2020 2021 Terminal Period 2019 2022 X X x X X 0.92911 0.86324 0.80205 0.74519 ($ millions) ROPI (NOPAT - [NOABeg x rw]) Discount factor [1/(1+rw)t] Present value of horizon ROPI Cum present value of horizon ROPI $ Present value of terminal ROPI NOA 1,528.92 1,489.76 1,453.67 1,418.5 5,890.85 24,880.6 Total firm value 23,020 53,791.44 11,723 42,068.44 NNO Firm equity value Shares outstanding (millions) Stock price per share 517.8 $ 81.24Step by Step Solution
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