Question

For 3M Company, Using the facilities of ValuePro (http://www.valuepro.net) for the company that you have selected to study conduct a discounted cash flow valuation. The analysis should explain each variable used in the analysis, why you accepted the given input, or how and why you changed a variable. The analysis should also examine the relevant cash flows, compare the final valuation to the stock’s current price and explain any differences. (Note: Remember to adjust the equity risk premium to between 5% and 6%; also, adjust the growth rate to an appropriate long-term growth rate.)

Intrinsic Stock Value	145.06
Excess Return Period (yrs)	10	Depreciation Rate (% of Rev)	4.31
Revenues ($mil)	30052	Investment Rate (% of Rev)	4.96
Growth Rate (%)	7.5	Working Capital (% of Rev)	20.52
Net Oper. Profit Margin (%)	20.92	Short-Term Assets ($mil)	13855
Tax Rate (%)	28.972	Short-Term Liab ($mil)	6041
Stock Price ($)	156.73	Equity Risk Premium (%)	3
Shares Outstanding (mil)	690.2	Company Beta	0.8925
10-Yr Treasury Yield (%)	5	Value Debt Out. ($mil)	4864
Bond Spread Treasury (%)	1.5	Value Pref. Stock Out. ($mil)	0
Preferred Stock Yield (%)	7.5	Company WACC(%)	7.55