Please show work for rating Forecasting and Estimating Share Value Using the DCF
ID: 2763155 • Letter: P
Question
Please show work for rating
Forecasting and Estimating Share Value Using the DCF Model
Following are the income statement and balance sheet for Intel Corporation.
(399)
** These investments are operating assets as they relate to associated companies.
(a) Compute Intel's net operating assets (NOA) for year-end 2012.
2012 NOA = $Answer
(b) Compute net operating profit after tax (NOPAT) for 2012, assuming a federal and state statutory tax rate of 37%.(Round your answer to the nearest whole number.)
2012 NOPAT = $Answer
(c) Forecast Intel's sales, NOPAT, and NOA for years 2013 through 2016 using the following assumptions:
Forecast the terminal period value using a terminal period growth of: 1% and the NOPM and NOAT assumptions above.
* Use sales rounded to nearest whole number for this calculation.
(d) Estimate the value of a share of Intel common stock using the discounted cash flow (DCF) model as of December 29, 2012; assume a discount rate (WACC) of 11%, common shares outstanding of 4,944 million, and net nonoperating obligations (NNO) of $(9,138) million (NNO is negative which means that Intel has net nonoperating investments). Use your rounded answers for subsequent calculations.
Consolidated Statements of Income Years Ended December
(In Millions, Except Per Share Amounts)
2012
2011
2010 Net revenue $ 53,341 $ 53,999 $ 46,623 Cost of sales 20,190 20,242 15,132 Gross margin 33,151 33,757 28,491 Research and development 10,148 8,350 6,576 Marketing, general and adminstrative 8,057 7,670 6,309 Amortization of acquisition-related intangibles 308 260 18 Operating expenses 18,513 16,280 12,903 Operating income 14,638 17,477 15,588 Gains (losses) on other equity investments, net 141 112 348 Interest and other, net 94 192 109 Income before taxes 14,873 17,781 16,045 Provisions for taxes 3,868 4,839 4,581 Net income $ 11,005 $ 12,942 $ 11,464
Explanation / Answer
(a) Intel's net operating assets (NOA) for year-end 2012 = current assets - current laibilities + non current assets - non current liabilities
= 31358 - 12898 + 52993 - 20250
=$51203
Note:-
Non current assets and liabilties are items which is not convertible into cash in the business until 1 year is completed
non current assets = total assets - total current assets
Non current liabilities = 13136 + 3412 + 3702
=20250