Question

# Question text Estimating Share Value Using the DCF Model Following are the income statement and balance...

Question text Estimating Share Value Using the DCF Model Following are the income statement and balance sheet for Texas Roadhouse for the year ended December 29, 2015. a. Assume the following forecasts for TXRH’s sales, NOPAT, and NOA for 2016 through 2019. Forecast the terminal period values assuming a 1% terminal period growth rate for all three model inputs: Sales, NOPAT, and NOA. Round your answers to the nearest dollar.

Reported Forecast Horizon Terminal
\$ thousands 2015 2016 2017 2018 2019 Period
Sales \$1,807,368 \$2,060,400 \$2,348,855 \$2,513,275 \$2,689,205 Answer
NOPAT 102,495 168,953 192,606 206,089 220,515 Answer
NOA 662,502 755,279 861,017 921,288 985,779 Answer

b. Estimate the value of a share of TXRH common stock using the discounted cash flow (DCF) model as of December 29, 2015; assume a discount rate (WACC) of 7%, common shares outstanding of 70,091 thousand, net nonoperating obligations (NNO) of \$(14,680) thousand, and noncontrolling interest (NCI) from the balance sheet of \$7,520 thousand. Note that NNO is negative because the company’s cash exceeds its nonoperating liabilities.

Rounding instructions:

• Use rounded answers for subsequent computations.

• Round answers to the nearest whole number unless otherwise noted.
• Round discount factor to 5 decimal places and stock price per share to two decimal places.
• Do not use negative signs with any of your answers below.

TXRH Reported Forecast Horizon Terminal
\$ thousands 2015 2016 2017 2018 2019 Period
C u m PV of horizon FCFF Answer
Present value of terminal FCFF Answer

 Reported Forecast Horizon \$ thousands 2015 2016 2017 2018 2019 Terminal Period Sales \$1,807,368 \$2,060,400 \$2,348,855 \$2,513,275 \$2,689,205 \$2,716,097.05 NOPAT 102,495 168,953 192,606 206,089 220,515 \$222,720.15 NOA 662,502 755,279 861,017 921,288 985,779 \$995,636.79
 TXRH Reported Forecast Horizon Terminal \$ thousands 2015 2016 2017 2018 2019 Period Increase in NOA \$     92,777.00 \$ 105,738.00 \$   60,271.00 \$      64,491.00 \$       9,857.79 FCFF (NOPAT - Increase in NOA) \$     76,176.00 \$   86,868.00 \$ 145,818.00 \$    156,024.00 \$   212,862.36 Discount factor [1 / (1 + 7%)^t ] 0.93458 0.87344 0.81630 0.76290 Present value of horizon FCFF \$     71,192.52 \$   75,873.88 \$ 119,030.92 \$    119,029.96 PV of horizon FCFF \$                   385,127.29 Present value of terminal FCFF \$                2,706,527.92 Total firm value \$                3,091,655.21 NNO \$                     14,680.00 NCI \$                       7,520.00 Firm equity value \$                3,098,815.21 Shares outstanding (thousands) 70,091.00 Stock price per share \$                            44.21