2024 8,570.0 979.0 86 Terminal Year 8,655.7 988.8 Required: Calculate the value of Milano stock at the end of 2020 usin

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Milano, Inc. has the following actual (for 2018) and forecast (for 2019 onwards) information:
Year
NOAEnd of Year
NOPAT
Additional Data
2020
$6,837.0
$737.0
WACC: 9.3%
(actual)
Cost of equity (KE): 11%
Terminal year growth rate: 1%
Net nonoperating obligations (NNO)
at the end of 2020: $4,640 million
Noncontrolling interest (NCI) at the
end of 2020: $299 million
2021
7,012.0
818.0
2022
8,193.0
902.0
2023
8,378.0
989.0
2024
8,570.0
979.0
Number of shares at the end of 2020:
862. 9 million
Terminal Year
8,655.7
988.8
Required:
Calculate the value of Milano stock at the end of 2020 using
(i) the Free Cash Flow and
(i1) Residual Operating Income (ROPI) valuation models.
Transcribed Image Text:Milano, Inc. has the following actual (for 2018) and forecast (for 2019 onwards) information: Year NOAEnd of Year NOPAT Additional Data 2020 $6,837.0 $737.0 WACC: 9.3% (actual) Cost of equity (KE): 11% Terminal year growth rate: 1% Net nonoperating obligations (NNO) at the end of 2020: $4,640 million Noncontrolling interest (NCI) at the end of 2020: $299 million 2021 7,012.0 818.0 2022 8,193.0 902.0 2023 8,378.0 989.0 2024 8,570.0 979.0 Number of shares at the end of 2020: 862. 9 million Terminal Year 8,655.7 988.8 Required: Calculate the value of Milano stock at the end of 2020 using (i) the Free Cash Flow and (i1) Residual Operating Income (ROPI) valuation models.
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