Question: Estimating Share Value Using the DCF Model Following are forecasted sales, NOPAT, and NOA for AT&T for 2019 through 2022 Note: Complete the entire

Estimating Share Value Using the DCF Model Following are forecasted sales, NOPAT,

Estimating Share Value Using the DCF Model Following are forecasted sales, NOPAT, and NOA for AT&T for 2019 through 2022 Note: Complete the entire question in Excel and format each answer to two decimal places. Then enter the answers into the provided spaces below with two decimal places. a. Forecast the terminal period values assuming the following terminal period growth rate. Assumption Terminal period growth rate 2% Reported Forecast Horizon Period $ millions Sales NOPAT 2018 2019 $173,439 NOA 23,578 371.722 24,765 26,090 27.495 393,614 417,070 441,934 2020 2021 $183,684 $194,544 $206,056 $218,259 $ 28,983 468,290 2022 Terminal Period 219,888 x 26,826.27 x 474.919 X b. Estimate the value of a share of AT&T common stock using the discounted cash flow (DCF) model as of December 31, 2018 using the following assumptions and the information above. Assumptions Discount rate (WACC) Common shares outstanding 5.70% 7,281.6 million Net nonoperating obligations (NNO) $177,838 million Noncontrolling interest $12,478 million Reported Forecast Horizon Terminal ($ millions) Increase in NOA 2018 2019 2020 2021 2022 Period $ 0 * $ 0 x $ 0 x $ 0x FCFF (NOPAT - Increase in NOA) 0 % 0x 0 X Present value of horizon FCFF 0 x 0X 0X Cum. present value of horizon FCFF $ 47 x Present value of terminal FCFF 473.35 x Total firm value 520.35 x Less (plus) NNO 177,838 Less NCI 12,478 v Firm equity value $ 0 X Shares outstanding (millions) 7,281.6 Stock price per share $ 0 X

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

10 A data analytics team at a construction company wants to determine what types of materials are used in bridges that need frequent maintenance. They review bridge maintenance records and the...

ent Attempt in Progress Sunland Company purchased treasury stock with a cost of $15700 during 2022. During the year, the company paid dividends of $20800 and issued bonds payable for proceeds of...

Developmental psychology Describe your understanding of the applied research fields in psychology. Provide an example of how you would apply your knowledge of these research fields to your selected...

A Gradebook X MBC Mod 13 Hc X MBC Home | Fin X | MBC Financial S X Final Team X Assessmen X *Dashboard x $ChatGPT x DeepSeek X G When cons X X G 2%...

Estimating Share Value Using the DCF Model Following are forecasted sales, NOPAT, and NOA for AT\&T for 2019 through 2022 Note: Complete the entire question in Excel and format each answer to two...

Estimating Share Value Using the DCF Model Following are forecasted sales, NOPAT, and NOA for AT&T for 2019 through 2022 a. Forecast the terminal period values assuming a 2% terminal period growth...

Estimating Share Value Using the DCF Model Following are forecasted sales, NOPAT, and NOA for AT\&T for 2019 through 2022 Note: Complete the entire question in Excel and format each answer to two...

Estimating Share Value Using the DCF Model Following are forecasted sales, NOPAT, and NOA for AT&T for 2019 through 2022 Note: Complete the entire question in Excel and format each answer to two...

Pina Colada Corp. was organized on January 1, 2022. It is authorized to issue 12,000 shares of 8%, $100 par value preferred stock, and 512,000 shares of no-par common stock with a stated value of $2...

In a recent sample of 84 used car sales costs, the sample mean was $6,425 with a standard deviation of $3,156. Assume the underlying distribution is approximately normal. a. Which distribution should...

She has read a number of newspaper articles about a huge IPO being carried out by a leading technology company. She wants to get as many shares in the IPO as possible and would even be willing to buy...

When a 2-year currency swap between U.S. Dollars and Currency X is created, the exchange rate is X2.01/USD and the term structures of interest rates are flat at 2.83% in the U.S. and 2.56% in Country...

Coverage B - Other Structures in a homeowners policy is standardly _ _ _ _ _ _ % of Coverage A ?

Show that the a real velocity is constant for a particle moving under the influence of an attractive force given by F(r) = kr. Calculate the time averages of the kinetic and potential energies and...

A particle moves in an elliptical orbit in an inverse-square-law central-force field. If the ratio of the maximum angular velocity to the minimum angular velocity of the particle in its orbit is n,...

Consider the problem of the particle moving on the surface of a cone, as discussed in Examples 7.4 and 8.7. Show that the effective potential is V(r) mgr cot a + 2mr?

Two waves traveling along a stretched string have the same frequency, but one transports three times the power of the other. What is the ratio of the amplitudes of the two waves?

The length of time (in seconds) that a user views a page on a Web site before moving to another page is a lognormal random variable with parameters = 2.5 and w2 = 1. (a) What is the probability that...

Design a minimum-mass symmetric three-bar truss (the area of member 1 and that of member 3 are the same) to support a load P, as was shown in Fig. 2.9. The following notation may be used: Pu = P cos...

Let {N(t), t 0} be a Poisson process with rate that is independent of the sequence X1, X2,... of independent and identically distributed random variables with mean and variance 2. Find Cov N(t),...

Let {N(t), t 0} be a Poisson process with rate that is independent of the nonnegative random variable T with mean and variance 2. Find (a) Cov(T, N(T )), (b) Var(N(T )).

Consider a two-server parallel queuing system where customers arrive according to a Poisson process with rate , and where the service times are exponential with rate . Moreover, suppose that arrivals...