Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 3, 2019, which the company labels fiscal 2018. $ millions Sales NOPAT NOA Forecast Horizon Period Reported 2018 2019 2020 2021 2022 $99,547 $106,515 $113,971 $121,949 $130,485 $133,095 Terminal Period 11,107 11,930 12,765 13.658 14,614 14,907 23,502 25,145 26,905 28,789 30,804 31,420 Answer the following requirements assuming a discount rate (WACC) of 7.85%, a terminal period growth rate of 2%, common shares outstanding of 1,105 million, net nonoperating obligations (NNO) of $25,230 million. Required a. Estimate the value of a share of Home Depot's common stock using the discounted cash flow (DCF) model as of February 3, 2019. Note: Do not round until your final answer; round your final answer to two decimal places. Stock price per share: $ 0 x b. Home Depot stock closed at $174.86 on March 28, 2019, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price?
Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 3, 2019, which the company labels fiscal 2018. $ millions Sales NOPAT NOA Forecast Horizon Period Reported 2018 2019 2020 2021 2022 $99,547 $106,515 $113,971 $121,949 $130,485 $133,095 Terminal Period 11,107 11,930 12,765 13.658 14,614 14,907 23,502 25,145 26,905 28,789 30,804 31,420 Answer the following requirements assuming a discount rate (WACC) of 7.85%, a terminal period growth rate of 2%, common shares outstanding of 1,105 million, net nonoperating obligations (NNO) of $25,230 million. Required a. Estimate the value of a share of Home Depot's common stock using the discounted cash flow (DCF) model as of February 3, 2019. Note: Do not round until your final answer; round your final answer to two decimal places. Stock price per share: $ 0 x b. Home Depot stock closed at $174.86 on March 28, 2019, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter10: Stockholder's Equity
Section: Chapter Questions
Problem 88PSA: Ratio Analysis Consider the following information taken from the stockholders equity section: How do...
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