Estimating Share Value Using the DCF Model Following are forecasts of Illinois Tool Works Inc. sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of December 31, 2018.

	Reported	Horizon Period
$ millions	2018	2019	2020	2021	2022	Terminal Period
Sales	$14,768	$15,654	$16,593	$17,589	$18,644	$19,017
NOPAT	2,711	2,880	3,053	3,236	3,430	3,499
NOA	9,462	10,028	10,630	11,268	11,944	12,183

Answer the following requirements assuming a discount rate (WACC) of 7.35%, a terminal period growth rate of 2%, common shares outstanding of 328.1 million, and net nonoperating obligations (NNO) of $6,204 million. (a) Estimate the value of a share of ITWs common stock using the discounted cash flow (DCF) model as of December 31, 2018.

Instructions:

• Round all answers to the nearest whole number, except for discount factors, shares outstanding (do not round), and stock price per share.

• Round discount factors to 5 decimal places.
• Round stock price per share to two decimal places.
• Do not use negative signs with any of your answers.

	Reported	Forecast Horizon
($ millions)	2018	2019	2020	2021	2022	Terminal Period
Increase in NOA		Answer	Answer	Answer	Answer	Answer
FCFF (NOPAT - Increase in NOA)		Answer	Answer	Answer	Answer	Answer
Discount factor [1 / (1 + rw)t ]		Answer	Answer	Answer	Answer
Present value of horizon FCFF		Answer	Answer	Answer	Answer
C.u.m present value of horizon FCFF	Answer
Present value of terminal FCFF	Answer
Total firm value	Answer
NNO	Answer
Firm equity value	Answer
Shares outstanding (millions)	Answer
Stock price per share	Answer