project the value of Amazon stock — on the balance sheet date for fiscal 2021 — using both the DCS (discounted cash flow) and ROPI (residual operating income) models. Use the following template and Be sure to label each line item clearly. you must explain and cite your models’ assumptions
Projecting Amazon’s Stock Price per share using the Discounted Cash Flows Method
Assumed Sales Growth per year assumption
Assumed Weighted Average Cost of Capital
Assumed Annual Growth Rate, Terminal Period
in millions
Sales
Operating profit
Statutory tax rate
Current NOPAT
NOPM
Projected NOPAT
NOA
NOA Turnover (Sales / NOA) (note: do not use this figure for Amazon)
Projected NOA
Increase (Decrease) in NOA
Projected FCFF
Cite Source or Logic
Cite Source or Logic
Cite Source or Logic
1
ACTUAL
2022
2
2023
2024
1
PROJECTED
2023
2
21%
Present Value
Discount FCFF (Projected Years) & Cumulative of this
Perpetuity of Terminal Value & Present Value of this
Total PV for the Projected Years and the Terminal Value
– NNO
-Noncontrolling Interest
=Firm Equity Value
∕# shares outstanding
=Predicted Share Price
Residual Operating Income Model
in millions
Sales
NOPAT
NOA
ROPI (NOPAT – NOA(BEG) X WACC)
Present Value of ROPI
Present Value of ROPI for the Terminal Period
Cumulative PV of ROPI for horizon & terminal
NOA (beginning)
Total Firm Value
– NNO
ACTUAL
2022
2024
-Noncontrolling Interest
=Firm Equity Value
∕# shares outstanding
=Predicted Share Price
Actual Stock Price on the Balance Sheet Date
ws Method
3
2025
4
PROJECTED
2026
5
6
7
2027
2028
2029
3
4
5
6
7
2025
2026
2027
2028
2029
Terminal
Beyond
Terminal
Period
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