The Morgan Stanley report on eBay, dated July 23, 2015, established a one-year forward price target of $29 per share.19At the time of the report, eBay’s stock price was $28.45, which the report noted implied a target price appreciation of 2 percent. The discounted free cash flow analysis in the report contained three cases, a base case involving a target price per share of $34, a bull case involving a price of $38 per share (and implicit target return of 34 percent), and a bear case involving a price per share of $24 (and implicit target return of −16 percent). The report used $24 to $38 as its interval forecast range and $29 as its point forecast. A spreadsheet for the base case is provided at the book web site, and shows that the report discounted eBay’s free cash flows at8 percent, described as its WACC, and used a terminal growth rate of 1 percent. Check to see if the free cash flow computations were done correctly. Then discuss the methodology the Morgan Stanley team used to arrive at their forecasts.