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Forecasting and Estimating Share Value Using the DCF Model Following are the income statement and balance sheet for Intel Corporation

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Forecasting and Estimating Share Value Using the DCF Model Following are the income statement and balance sheet for Intel Corporation.

INTEL CORPORATION

Consolidated Statements of Income

Year Ended (In millions) Dec. 25, 2010 Dec. 26, 2009 Dec. 27, 2008

Net revenue $ 43,623 $ 35,127 $ 37,586

Cost of sales 15,132 15,566 16,742

Gross margin 28,491 19,561 20,844

Research and development 6,576 5,653 5,722

Marketing, general and administrative 6,309 7,931 5,452

Restructuring and asset impairment charges--231710

Amortization of acquisition-related intangibles18356

Operating expenses 12,903 13,850 11,890

Operating income 15,588 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 16,045 5,704 7,686

Provisions for taxes 4,581 1,335 2,394

Net income$ 11,464 $ 4,369 $ 5,292

 

INTEL CORPORATION

Consolidated Balance SheetsAs of Year-Ended (In millions, except par value)

Dec. 25, 2010 Dec. 26, 2009 AssetsCurrent assets

Cash and cash equivalents $ 5,498 $ 3,987

Short-term investments 11,294 5,285

Trading assets 5,093 4,648

Accounts receivables, net 2,867 2,273

Inventories 3,757 2,935

Deferred tax assets 1,488 1,216

Other current assets 1,614 813

Total current assets 31,611 21,157

Property, plant and equipment, net 17,899 17,225

Marketable equity securities 1,008 773

Other long-term investments** 3,026 4,179

Goodwill 4,531 4,421

Other long-term assets 5,111 5,340

Total assets $63,186 $53,095

Liabilities

Current liabilities

Short-term debt $38 $172

Accounts payable 2,290 1,883

Accrued compensation and benefits 2,888 2,448

Accrued advertising 1,007 773

Deferred income on shipments to distributors 622 593

Other accrued liabilities 2,482 1,722

Total current liabilities 9,327 7,591

Long-term income taxes payable 190 193

Long-term debt 2,077 2,049

Long-term deferred tax liabilities 926 555

Other long-term liabilities 1,236 1,003

Total liabilities 13,756 11,391

Stockholders' equity:

Preferred stock, $0.001 par value----Common stock, $0.001 par value, 10,000 shares authorized; 5,581 issued and 5,511

outstanding and capital in excess of par value 16,178 14,993

Accumulated other comprehensive income (loss) 333 393

Retained earnings 32,919 26,318

Total stockholders' equity 49,430 41,704

Total liabilities and stockholders' equity $ 63,186 $ 53,095

 

 

(a) Compute Intel's net operating assets (NOA) for year-end 2010.

2010 NOA = $Answer

 

 

 

 

(b) Compute net operating profit after tax (NOPAT) for 2010, assuming a federal and state statutory tax rate of 37%.HINT: Gains/losses on equity method investments are considered operating income. Round your answer to the nearest whole number.

2010 NOPAT = $Answer

 

 

(c) Forecast Intel's sales, NOPAT, and NOA for years 2011 through 2014 using the following assumptions:Sales growth10%Net operating profit margin (NOPM)26%Net operating asset turnover (NOAT) at fiscal year-end1.50

 

Forecast the terminal period value using the assumptions above and assuming a terminal period growth of: 1%.

 

($ millions) 2010 2011 Est.2012 Est.2013 Est.2014 Est.Period

 

Sales (rounded two decimal places)Answer

 

Sales (rounded nearest whole number)Answer

 

 

NOPAT (rounded nearest whole number)*Answer

 

 

NOA (rounded nearest whole number)*Answer