Estimate the value of a share of stellar common stock

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Following are forecasts of sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of December 31, 2013 for Stellar Stores, Inc.

 

Horizon Period

 

(in millions)

Reported 2013

2014

2015

2016

2017

Terminal Period

Sales

$37,006

$44,777

$54,180

$65,558

$79,325

$80,912

NOPAT

1,292

1,563

1,891

2,288

2,768

2,824

NOA

10,007

102

14,643

17,718

21,439

21,868

Assuming a terminal period growth rate of 2%, a discount rate (WACC) of 8%, common shares outstanding of 814.3 million, and net nonoperating obligations (NNO) of $1,676 million, estimate the value of a share of Stellar common stock using the discounted cash flow (DCF) model as of December 31, 2013.

Select one:

a. $31.06b. $32.95c. $23.59d. $25.23

Reference no: EM131764206

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