Forecasting and Estimating Share Value Using the DCF Model Following are the inc
ID: 2760332 • Letter: F
Question
Forecasting and Estimating Share Value Using the DCF Model
Following are the income statement and balance sheet for Intel Corporation.
Compute net operating profit after tax (NOPAT) for 2010, assuming a federal and state statutory tax rate of 37%.(Round your answer to the nearest whole number.)
2010 NOPAT =
Consolidated Statements of Income Year Ended (In millions) Dec. 25, 2010 Dec. 26, 2009 Dec. 27, 2008 Net revenue $ 45,223 $ 35,127 $ 37,586 Cost of sales 15,132 15,566 16,742 Gross margin 30,091 19,561 20,844 Research and development 6,576 5,653 5,722 Marketing, general and adminstrative 6,309 7,931 5,452 Restructuring and asset impairment charges -- 231 710 Amortization of acquisition-related intangibles 18 35 6 Operating expenses 12,903 13,850 11,890 Operating income 17,188 5,711 8,954 Gains (losses) on equity method investments, net 117 (147) (1,380) Gains (losses) on other equity investments, net 231 (23) (376) Interest and other, net 109 163 488 Income before taxes 17,645 5,704 7,686 Provisions for taxes 4,581 1,335 2,394 Net income $ 13,064 $ 4,369 $ 5,292
Explanation / Answer
Solution:
NOPAT = NOPBT - [ Tax expense + {pretax net non- operating expense x tax rate}]
= 17,188 - [ 4,581 + {109 x 37%}]
= 17,188 - [4,581 + 40.33]
= 17,188 - 4,621.33
= 12,566.67