Following are forecasts of Target Corporation's sales, net operating profit after tax (NOPAT), and net operating...
Following are forecasts of Target Corporation's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 30, 2016.
| Reported | Horizon Period | Terminal | ||||
|---|---|---|---|---|---|---|
| $ millions | 2016 | 2017 | 2018 | 2019 | 2020 | Period |
| Sales | $74,229 | $75,714 | $77,228 | $78,773 | $80,348 | $81,151 |
| NOPAT | 3,340 | 3,407 | 3,475 | 3,545 | 3,616 | 3,652 |
| NOA | 22,269 | 22,714 | 23,168 | 23,632 | 24,104 | 24,345 |
Answer the following requirement assuming a terminal period growth rate of 1%, a discount rate (WACC) of 6%, common shares outstanding of 602 million, and net nonoperating obligations (NNO) of $8,488 million.
a. Estimate the value of a share of Target common stock using the residual operating income (ROPI) model as of January 30, 2016.
Instructions:
-
Round all answers to the nearest whole number, except for discount factors and stock price per share.
- Round discount factors to 5 decimal places.
- Round stock price per share to two decimal places.
- Do not use negative signs with any of your answers.
-
Reported Forecast Horizon Terminal ($ millions) 2016 2017 2018 2019 2020 Period ROPI (NOPAT - [NOABeg x rw]) Answer Answer Answer Answer Answer Discount factor [1/(1+rw)t] Answer Answer Answer Answer Present value of horizon ROPI Answer Answer Answer Answer Cumulative present value of horizon ROPI Answer Present value of terminal ROPI Answer NOA Answer Total firm value Answer NNO Answer Firm equity value Answer Shares outstanding (millions) Answer Stock price per share
Homework Answers
![- AM AR $ $ $ $ AL17 AJ AK AL Reported ($ millions) 2016 NOPAT NOA Beg [NOABeg x rw] 6A ROPI (NOPAT - [NOABeg x rw]) 7 B Disc](http://img.homeworklib.com/questions/80920150-77ba-11ea-b014-97acb75dd887.png?x-oss-process=image/resize,w_560)
![AL19 AJ 3407 AK AL Reported ($ millions) 2016 NOPAT NOA Beg [NOABeg x rw] 6A ROPI (NOPAT - [NOABeg x rw]) 7 B Discount factor](http://img.homeworklib.com/questions/80f2c4d0-77ba-11ea-9f33-cb7456405b92.png?x-oss-process=image/resize,w_560)
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