Question 4 / 11:58am / Need Solved
(A)
(B)
Answer the following requirements assuming a discount rate (WacC) of 11%, a terminal period growth rate of 1%, common shares outstanding of 410.5 million, net nonoperating obligati of 3792 million and nonkontrolling interest (NC)) on the balance sheet of $690 million. (a) Estimate the value of a share of Best Buy common stock using the residual operating income (ROP1) model as of February 26,2011. Rounding Instructions: - Rlound your answer to the nearest whole number except for the discount factors, shares outstanding and the stock price per share. - Round the discount foctors to five decimal places, common shares outstanding to one decimal place, and the stock price to two decimal places; - Use your rounded answers for subsequent calculations. (b) Aswume Best Biy (BBY) stock dosed at $43.47 on April 1, 2011 . How does your valuation estimate corrpare with this closing price? What do you belitve ace some reaschs for the difterence? Ostock prices are a function of many factors. it is impossible to speculate on the reasons for the difference. discount rate Our lower stock price estimate might be due to more optimistic forecasts or a lower dotcount rate compsred to other investors and anslysts model assunptick. discount rate. Our lowee stock price estimate might be dut to more eptimistc forecasts or a lower descount rate compared to other investors' and ans'yet' model atsumptient. Oour stod price extimate is lowei than the Bex market peice. indicatig that we beline tha bey stock is overvalued stock prices are a finction of expected nopar and Nok as weit as the whec Prowe anwet al parts of the quesuion. Answer the following requirements assuming a discount rate (WacC) of 11%, a terminal period growth rate of 1%, common shares outstanding of 410.5 million, net nonoperating obligati of 3792 million and nonkontrolling interest (NC)) on the balance sheet of $690 million. (a) Estimate the value of a share of Best Buy common stock using the residual operating income (ROP1) model as of February 26,2011. Rounding Instructions: - Rlound your answer to the nearest whole number except for the discount factors, shares outstanding and the stock price per share. - Round the discount foctors to five decimal places, common shares outstanding to one decimal place, and the stock price to two decimal places; - Use your rounded answers for subsequent calculations. (b) Aswume Best Biy (BBY) stock dosed at $43.47 on April 1, 2011 . How does your valuation estimate corrpare with this closing price? What do you belitve ace some reaschs for the difterence? Ostock prices are a function of many factors. it is impossible to speculate on the reasons for the difference. discount rate Our lower stock price estimate might be due to more optimistic forecasts or a lower dotcount rate compsred to other investors and anslysts model assunptick. discount rate. Our lowee stock price estimate might be dut to more eptimistc forecasts or a lower descount rate compared to other investors' and ans'yet' model atsumptient. Oour stod price extimate is lowei than the Bex market peice. indicatig that we beline tha bey stock is overvalued stock prices are a finction of expected nopar and Nok as weit as the whec Prowe anwet al parts of the quesuion
