Estimating Share Value Using the DCF Model:

Following are forecasted sales, NOPAT, and NOA of AT&T:

Colgate Palmolive Reported Forecast Horizon Period

$ millions $20182019202020212022$

Sales $$170,756$ $$181,001191,861$ $$203,373$ $$215,576$

NOPAT $20,89522,08223,40724,81226,300$

NOA $369,039390,831414,387439,251465,607$

Required:

Forecast the terminal period values assuming a $2\%$ terminal period growth rate.

Estimate the value of a share of AT&T common stock using the discounted cash flow $($DCF$)$ model as of December $31,2018$: assume a discount rate $($WACC$)$ of $5\mathrm{.}7\%,$ common shares outstanding of $7,281\mathrm{.}6$ million, net obligations $($NMO$)$ of $$175,155$ million, a and noncontrolling interest $($NCI$)$ from the Balance Sheet of $$9,795$ million.

AT&T closed at $$30\mathrm{.}85$ on February $20,2019,$ the date the FORM $10-$K was filed with the SEC How does your valuation estimate compare with its closing price?

If WACC has been $6\mathrm{.}2\%,$ what would the valuation estimate have been? What about if WACC has been $5\mathrm{.}29\%?$