Estimating Share Value Using the DCF Model

Following are forecasts of Target Corporation$$s sales, net operating profit after tax $($NOPAT$),$ and net operating assets $($NOA$)$ as of February $2,2019,$ which we label fiscal year $2018.$

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.

Reported Forecast Horizon Period Terminal

$ millions $20182019202020212022$ Period

Sales $$76,106$ $$79,124$ $$83,830$ $$87,234$ $$92,346$ $$93,428$

NOPAT $3,2694,1523,5724,5013,9394,767$

NOA $23,77024,19726,15726,67728,76128,571$

Answer the following requirements with the following assumptions:

Assumptions

Terminal period growth rate $2\%$

Discount rate $($WACC$)7\mathrm{.}63\%$

Common shares outstanding $517\mathrm{.}80$ million

Net nonoperating obligations $($NNO$)$ $$12,473$ million

Estimate the value of a share of Target common stock using the discounted cash flow $($DCF$)$ model as of February $2,2019.$

Reported Forecast Horizon Terminal

$($$ millions$)20182019202020212022$ Period

Increase in NOA Answer

$427$

Answer

$1,960$

Answer

$520$

Answer

$2,084$

Answer

$(190)$

FCFF $($NOPAT $-$ Increase in NOA$)$ Answer

$3,725$

Answer

$1,612$

Answer

$3,981$

Answer

$1,855$

Answer

$4,957$

Present value of horizon FCFF Answer

$3,460$

Answer

$1,392$

Answer

$3,193$

Answer

$1,382$

Cum. present value of horizon FCFF Answer

$9,428$

Present value of terminal FCFF Answer

Total firm value Answer

NNO Answer

$12,473$

Firm equity value Answer

Shares outstanding $($millions$)$ Answer

$518$

Stock price per share Answer