Mod $14$ Homework

Assumption

Terminal period growth rate

$2\%$

$\backslash$table$[[$s millions,$\backslash$table$[[$Reported$],[2018]],\backslash$table$[[$Forecast Horizon Period$],[2019]],2020,2021,2022,\backslash$table$[[$Terminal$],[$Period$]],],[$Sales$,$$$170,756,$$$181,001,$$$191,861,$$$203,373,$$$215,576,$$$,0],[$NOPAT$,20,477,21,640,22,939,24,316,25,774,,0],[$NOA$,361,658,383,112,406,099,430,466,456,295,,0]]$

b$.$ Estimate the value of a share of AT&T common stock using the residual operating income $($ROPI$)$ model as of December $31,2018$ using the following assumptions and the information above.

$\backslash$table$[[$Assumptions$],[$Discount rate $($WACC$),5\mathrm{.}7\%,],[$Common shares outstanding,$7,136\mathrm{.}0,$million$],[$Net nonoperating obligations $($NNO$),$$$171,652,$million$],[$Noncontrolling interest,$$9,599,$million$]]$

C$.$ AT&T closed at $$30\mathrm{.}85$ on February $20,2019,$ the date the Form $10-K$ was filed with the SEC. How does your valuation estimate compare with this closing price?