Estimating Share Value Using the ROPI Model

Following are forecasts of Target Corporations 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	2018	2019	2020	2021	2022	Period
Sales	$76,376	$79,124	$84,100	$87,234	$92,616	$93,428
NOPAT	3,269	4,422	3,572	4,771	3,939	5,037
NOA	24,040	25,217	26,427	27,697	29,031	29,591

Answer the following requirements with the following assumptions:

Assumptions
Terminal period growth rate	2%
Discount rate (WACC)	7.63%
Common shares outstanding	517.80	million
Net nonoperating obligations (NNO)	$12,743	million

Estimate the value of a share of Target common stock using the residual operating income (ROPI) model as of February 2, 2019.

		Reported	Forecast Horizon				Terminal
	($ millions)	2018	2019	2020	2021	2022	Period
	ROPI (NOPAT - [NOABeg x rw])
	Present value of horizon ROPI
	Cumulative present value of horizon ROPI
	Present value of terminal ROPI
	NOA
	Total firm value
	Less NNO
	Firm equity value
	Shares outstanding (millions)
	Stock price per share