1. Using any data that you think relevant, forecast Costcos sales for the current year (2020; the year ending August 2020) and the next 4 years (total of 5 years). 2. Using your sales forecast and historic (or expected) ratios, construct a balance sheet and income statement for the current year (2020) and the next 4 years. You may use the ratios computed in Part I of the Project or adjust them as you think necessary. Compute NOPAT and NOA for each year. 3. Compare your forecast of net income for the current year (2020) with the earnings forecast from the stock report posted on Canvas, Yahoo! Finance, or another source (identify the source). If your forecast of net income differs from the published forecast, that's perfectly fine, but you need to explain why you think your forecast is different. 4. Compute a cost of equity capital for Costco using the capital asset pricing model. Compute a cost of debt capital. Compute a weighted average cost of capital. Show these computations. 5. Using your forecasts of NOPAT and NOA for the next 5 years, compute free cash flows to the firm (FCFF from Chapter 13) and residual operating income (ROPI from Chapter 14) for the next 5 years. Make sure your computed numbers are based on consistent assumptions (that is, use your forecasts of NOPAT and NOA for both computations). 6a. Using your estimate of FCFF, compute the value of Costcos equity as of September 1, 2019 using the discounted free cash flow (DCF) valuation model from Chapter 13. Make an assumption about free cash flows after year 5. 6b. Using your estimate of ROPI, compute the value of Costcos equity as of September 1, 2019 using the residual operating income (ROPI) valuation model from Chapter 14. Make an assumption about residual income after year 5. 7. If your estimated equity value is not the same using the FCFF and ROPI methods, explain why there is a difference. For parts 8, 9, and 10, use the equity value from the ROPI model. 8. Assuming your estimates of NOPAT and NOA are correct, what cost of equity capital would be required to have your estimated equity value equal the market cap on September 1, 2019? (Note: could be negative.) Is this a reasonable cost of equity capital for Costco? 9. Assuming your weighted average cost of capital is correct, what future terminal value would be required to have your estimated equity value equal the market cap on September 1, 2019? (Terminal value is the value of Costco at the end of your estimation period). Is this a reasonable terminal value for Costco? 10. Explain why you think your estimated equity value is different from the market cap on September 1, 2019. [Note: this explanation is worth half of the credit for this project.]