Can you please help me with this assignment? Thanks!

"You work for a prestigious investment bank, Lazard Ltd, which has been recently commissioned by the US-based e-commence giant, Amazon.com, Inc. (Amazon hereafter), to investigate potential M&A opportunities. The lead partner has asked you to provide a valuation of a takeover candidate. TARGET VALUATION In connection with its long-term strategic plans involving growth through M&As, Amazon has been continuously searching for strategic acquisition candidates. As part of this process, Amazon's management has identified Best Buy Co., Inc. (Best Buy hereafter; Ticker Symbol: BBY) as a takeover target with strategic assets that fit into Amazon's long-term growth strategy. Best Buy is a leading consumer electronics retailer specializing in technology products, services and solutions. It enjoys strong customer loyalty largely driven by its unique tech supporting offering. For instance, Best Buy's Total Tech Support program provides members unlimited Geek Squad support for all their technology, in addition to discounts on installations, protection and in-home services. The program reinforces the Best Buy brand, allowing Best Buy to meet customers' needs when and where they want in a way that is difficult for Amazon. In addition, Best Buy operates more than 1,400 retail stores in the United States and Canada. By acquiring Best Buy, Amazon can expand its physical retail footprint and further strengthen its competitive position in the market. However, Amazon's management is concerned that Best Buy's stock is currently overvalued and has commissioned JP Morgan to perform a proper valuation of Best Buy. Your lead partner has provided you with Best Buy's most recent financial statements (available in the 10-K filings below). Your task is to extract relevant historical information from Best Buy's financial statements and estimate its value using a Free Cash Flow Methodology.

BBY Form 10-K for 2024: summarizes Best Buy's financial position and performance in 2024 (Year 0).

BBY Form 10-K for 2023: summarizes Best Buy's financial position and performance in 2023.

BBY Form 10-K for 2022: summarizes Best Buy's financial position and performance in 2022. To help with your calculations, the lead partner advises you to make the following assumptions. Broadly speaking, you need to use Best Buy's historical financial data to forecast the company's sales, variable cost, fixed cost, depreciation, working capital, and capital expenditure over the next 4 years, i.e., beginning in year 2025 (year 1) and ending in year 2028 (year 4). You then need to work out the terminal value at the end of year 4 as well as the Weighted Average Cost of Capital (WACC) that will be used as the discount rate in your free cash flow analysis. Forecasting free cash flow to the firm (FCFF): Compute the average sales growth rate over the last 4 years and use that rate to forecast the sales revenue in the next 4 years. To be clear, the term "sales revenue" or "sales" in this assignment refers to "Revenue" in Best Buy's Consolidated Statements of Earnings. The ratios of variable costs to sales, working capital to sales, and capital expenditure to sales are assumed to be the same as in year 0 (2024). Use cost of sales as a proxy for variable costs. Use the average depreciation and amortization over a rolling four-year window to forecast the depreciation expense in the next 4 years. Use the average fixed costs over a rolling four-year window to forecast the fixed costs in the next 4 years. Use the selling, general and administrative (SG&A) expenses as a proxy for fixed costs. Make assumptions about the growth rate of the FCFF after year 4 based on your own research.

Estimating the discount rate (WACC): Get the equity beta of Best Buy from Yahoo Finance; Risk free rate is assumed to be 3% and market risk premium is assumed to be 6%. Use the interest expense divided by the book value of total long-term liabilities in year 0 (2024) to work out Best Buy's cost of debt. Use the book value of total long-term liabilities and market value of equity as of the fiscal year-end (February 28, 2024) to work out the proportion of debt and equity. Hint: you can obtain Best Buy's current and historical stock prices from Yahoo Finance; Use the adjusted closing stock price on the last trading day of the financial year (not the calendar year) if the fiscal year-end falls on a nontrading day. The cost of debt, cost of equity, and debt-to-equity (D/E) ratio are assumed to remain constant over time. The expected effective tax rate is 25%. You can make additional assumptions as necessary, provided that they are not inconsistent with those of the lead partner.

REQUIRED: (a) Calculate Best Buy's cost of equity using CAPM. (2 marks) (b) Calculate Best Buy's cost of debt. (2 marks) (c) Calculate Best Buy's WACC. (2 marks) (d) Provide a thorough justification for your choice of the growth rate after year 4. Clearly state any other assumptions you have made. (2 marks) (e) Estimate the years 1-4 free cash flow and the terminal value at the end of year 4. (15 marks) (f) Find the value of Best Buy. (3 marks) (g) Compare your valuation with the latest Best Buy stock price. Based on your evaluation, conclude whether the company's stock is currently overvalued. (3 marks) (h) How would your conclusion in part (g) affect Amazon's incentive to acquire Best Buy? (2 marks) (i) Determine how sensitive your valuation is to a 1% change in the average sales growth rate over the last 4 years. Discuss the impact of such changes on your conclusion. (5 marks) (j) Discuss any limitations of your analysis. Your discussion should include a critical evaluation of the assumptions used in valuation. Make sure your discussion is specific and linked to the real macroeconomic and/or firm-specific factors that may influence the estimation of Best Buy's value. (4 marks) (Total 40 Marks).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) = ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 29, 2022 R a TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-9595 BEST BUY BEST BUY CO., INC. (Exact name of registrant as specified in its charter) Minnesota 410907483 State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 7601 Penn Avenue South 55423 Richfield, Minnesota (2ip Code) (Address of principal executive offices) (612) 291-1000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Symbol Name of exchange on which registered New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mar i the regisirant is a well-known seasaned issuer, as defined in Rule 405 of the Securiies Act. Yes & No Indicate by check mark i the registrant s not required to file reports pursuant to Saction 13 or Section 15(d) of the Act. Yos No = Indicate by check mark whether the registrant (1) has fled all reports required 1o be fled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 day. Yes X No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T ( 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the regisirant was required to submit such files) Yos @No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated fler. a smaller reporling company, o an emerging growth company. See the definitions of \"large acoelerated filer,\" \"acceleraled filer,\" \"smaller reporting company,\" and *emerging growth company\" in Rule 12-2 of the Exchange Act. Large Accelerated Filer Accelerated Filer Non-accelerated Filer Smaller Reperting Company Emerging Growih Company 1fan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant has filed a report on and attestation to ifs management's assessment of the effectiveness of ts internal control over financial reporting under Section 404{b) of the Sarbanes-Oxiey Act (15 U.S.C. 7262{b) by the registered public accounting firm that prepared or issued its auditreport, & Indicate by check mark whether the registrant is a shell company (as defined in Rule 120.2 of the Act) Yos N The aggregate market value of the voting and non-voting common equity held by non-affiates of th ragistrant as of July 30, 2021, was approximately 24.5 billon, computed by referance to the price of 112.35 per share, the price at which the common equity was last sold on July 30, 2021, as reported on the New York Stock Exchange-Composite Index. (For purposes of this caleulaiion, all o the registrant's directors and executive officers are deemed affliates of the registrant } As of March 16, 2022, the registrant had 225,227,756 shares of its common stock. 30.10 par value per share, issued and outstanding DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Defintive Proxy Statement relating o its 2022 Regular Meeting of Shareholders ("Proxy Statement\") are incorporated by reference into Part lil. The Proxy Statement will be filed with the U S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates. (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 28, 2023 OR CJ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-9595 BUY BEST BUY CO,, INC. (Exact name of registrant as specified in its charter) Minnesota 41-0907483 State or other jurisdiction of (I.LR.S. Employer incorporation or organization Identification No.) 7601 Penn Avenue South 55423 Richfield, Minnesota (Zip Code) (Address of principal executive offices) (612) 291-1000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of exchange on which registered Common Stock, $0.10 par value per share BBY New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes X No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T ( 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes Xl No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of \"large accelerated filer,\" \"accelerated filer,\" \"smaller reporting company,\" and \"emerging growth company\" in Rule 12b-2 of the Exchange Act. Accelerated Filer Non-accelerated Filer X Large Accelerated Filer Smaller Reporting Company Emerging Growth Company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to 240.10D-1(b). Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of July 29, 2022, was approximately $13.4 billion, computed by reference to the price of $76.99 per share, the price at which the common equity was last sold on July 29, 2022, as reported on the New York Stock Exchange-Composite Index. (For purposes of this calculation, all of the registrant's directors and executive officers are deemed affiliates of the registrant.) As of March 15, 2023, the registrant had 218,045,737 shares of its common stock, $0.10 par value per share, issued and outstanding