Estimating Share Value Using the ROPI Model
Refer to the information in M 12-13 to answer the following requirements.
a. Estimate the value of a share of Target common stock using the residual operating income (ROPI) model as of February 2, 20 1 3.
b. Target Corporation (TGT ) stock closed at $68 .52 on March 20 , 20 13, the date the 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? What do you believe are some reasons for the difference?
Estimating Share Value Using the DCF Model
Following are forecasts of Target Corporation 's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 2, 20 13.
Answer the following requirements assuming a terminal period growth rate of 1%, a discounter are (WACC) of 7%, common shares outstanding of 645 million, and net nonoperating obligations (NNO) of $ 11,023 million.
a. Estimate the value of a share of Target common stock using the discounted cash flow (DCF) model as of February 2, 2013.
b. Target Corporation (TGT) stock closed at $68.52 on March 20, 20 13, the dare the I 0-K was filed with the SEC. How does you r valuation estimate compare with this closing price? What do you believe are some reasons for the difference?
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