(d) Estimate the value of a share of Cisco common stock using the discounted cash flow (DCF) model as of July 27, 2019; assume a discount rate (WACC) of 7.6%, common shares outstanding of 5,029 million, and net nonoperating obligations (NNO) of $(8,747) million (NNO is negative, which means that Cisco has net nonoperating investments) Instructions: • Use your rounded answers for subsequent calculations. • Round all answers to the nearest whole number, except for discount factors and stock price per share. • Round discount factors to 5 decimal places. Round stock price per share to two decimal places. • Use a negative sign with your NNO answer. CSCO Reported Forecast Horizon Terminal ($ millions) 2019 2020 Est. 2021 Est. 2022 Est. 2023 Est. Period DCF Model Increase in NOA $ 1,241 x $ 1,000 x $ 0 x $ 0 x $ 11,662 x FCFF (NOPAT - Increase in NOA) 9,682 x 0 x 0 x 11,662 x Discount factor 0.92937 V 0.86372 v 0.80272 v 0.74602 v Present value of horizon FCFF 8,999 x 9,113 * 8,893 * 8,678 x Cum present value of horizon FCFF $ 37,487 * Present value of terminal FCFF 154,772 * Total firm value 192,665 v NNO (8,747) V Firm equity value 2$ 201,412 v Shares outstanding (millions) 5,029 v Stock price per share 40.05 V
(d) Estimate the value of a share of Cisco common stock using the discounted cash flow (DCF) model as of July 27, 2019; assume a discount rate (WACC) of 7.6%, common shares outstanding of 5,029 million, and net nonoperating obligations (NNO) of $(8,747) million (NNO is negative, which means that Cisco has net nonoperating investments) Instructions: • Use your rounded answers for subsequent calculations. • Round all answers to the nearest whole number, except for discount factors and stock price per share. • Round discount factors to 5 decimal places. Round stock price per share to two decimal places. • Use a negative sign with your NNO answer. CSCO Reported Forecast Horizon Terminal ($ millions) 2019 2020 Est. 2021 Est. 2022 Est. 2023 Est. Period DCF Model Increase in NOA $ 1,241 x $ 1,000 x $ 0 x $ 0 x $ 11,662 x FCFF (NOPAT - Increase in NOA) 9,682 x 0 x 0 x 11,662 x Discount factor 0.92937 V 0.86372 v 0.80272 v 0.74602 v Present value of horizon FCFF 8,999 x 9,113 * 8,893 * 8,678 x Cum present value of horizon FCFF $ 37,487 * Present value of terminal FCFF 154,772 * Total firm value 192,665 v NNO (8,747) V Firm equity value 2$ 201,412 v Shares outstanding (millions) 5,029 v Stock price per share 40.05 V
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter7: Exponents And Exponential Functions
Section: Chapter Questions
Problem 68SGR
Related questions
Question
Please answer this question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, statistics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Glencoe Algebra 1, Student Edition, 9780079039897…
Algebra
ISBN:
9780079039897
Author:
Carter
Publisher:
McGraw Hill
Glencoe Algebra 1, Student Edition, 9780079039897…
Algebra
ISBN:
9780079039897
Author:
Carter
Publisher:
McGraw Hill