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ACT 5725

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	$74,340	$75,827	$77,344	$78,891	$80,469	$81,274
NOPAT	3,345	3,412	3,480	3,550	3,621	3,657
NOA	22,302	22,748	23,203	23,667	24,141	24,382

Answer the following requirements 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 discounted cash flow (DCF) 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
Increase in NOA			Answer	Answer	Answer	Answer	Answer
FCFF (NOPAT - Increase in NOA)			Answer	Answer	Answer	Answer	Answer
Discount factor [1/(1+rw)t]			Answer	Answer	Answer	Answer
Present value of horizon FCFF			Answer	Answer	Answer	Answer
Cum. present value of horizon FCFF		$Answer
Present value of terminal FCFF		Answer
Total firm value		Answer
NNO		Answer
Firm equity value		$Answer
Shares outstanding (millions)		Answer
Stock price per share		$Answer

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