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 $31,2018.$

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 $$8,861$ $$9,392$ $$9,956$ $$10,553$ $$11,186$ $$11,410$

NOPAT $1,6271,7281,8321,9422,0582,099$

NOA $5,6776,0176,3786,7617,1667,310$

Answer the following requirements with the following assumptions:

Assumptions

Terminal period growth rate $2\%$

Discount rate $($WACC$)7\mathrm{.}35\%$

Common shares outstanding $197\mathrm{.}00$ million

Net nonoperating obligations $($NNO$)$ $$3,722$ million$\backslash$table$[[$Terminal period growth rate,$2\%,],[$Discount rate $($WACC$),7\mathrm{.}35\%,],[$Common shares outstanding,$197\mathrm{.}00,$million$],[$Net nonoperating obligations $($NNO$),$$$3,722,$million$]]$

$($a$)$ Estimate the value of a share of ITW's common stock using the discounted cash flow $($DCF$)$ model as of December $31,2018.$

$\backslash$table$[[($$ millions$),\backslash$table$[[$Reported$],[2018]],$Forecast Horizon,Terminal$],[2019,2020,2021,2022,$Period$],[$Increase in NOA,,$$,$$$,$$$,$$$,$$