Estimating Share Value Using the ROPI Model Following are forecasts of Whole Foods sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of September 25, 2016. Reported Horizon Period millions 2016 2017 2018 2019 2020 Sales $15,724 $15,881 $16,199 $16,523 $16,853 526 524 535 545 556 3,500 3.570 3,642 3,715 NOPAT NOA 3,466 Terminal Period $17,022 562 3.752 Answer the following requirements assuming a discount rate (WACC) of 6%, a terminal period growth rate of 1%, common shares outstanding of 318.3 million, and net nonoperating obligations (NNO) of $242 mill (a) Estimate the value of a share of Whole Foods' common stock using the residual operating income (ROPI) model as of September 25, 2016. Rounding instructions: • Round answers to the nearest whole number unless noted otherwise. • Use your rounded answers for subsequent calculations.
Estimating Share Value Using the ROPI Model Following are forecasts of Whole Foods sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of September 25, 2016. Reported Horizon Period millions 2016 2017 2018 2019 2020 Sales $15,724 $15,881 $16,199 $16,523 $16,853 526 524 535 545 556 3,500 3.570 3,642 3,715 NOPAT NOA 3,466 Terminal Period $17,022 562 3.752 Answer the following requirements assuming a discount rate (WACC) of 6%, a terminal period growth rate of 1%, common shares outstanding of 318.3 million, and net nonoperating obligations (NNO) of $242 mill (a) Estimate the value of a share of Whole Foods' common stock using the residual operating income (ROPI) model as of September 25, 2016. Rounding instructions: • Round answers to the nearest whole number unless noted otherwise. • Use your rounded answers for subsequent calculations.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
- Se.131.
![($ millions)
ROPI (NOPAT-[NOABeg x rw])
Discount factor [1/(1 + rw)t]
Present value of horizon ROPI
Cum present value of horizon ROPI $
Present value of terminal ROPI
NOA
Total firm value
NNO
Firm equity value
Shares outstanding (millions)
Stock price per share
(round 5 decimal places)
$
Reported
2016
$
0
0
2017
Horizon Period
0
0
0
0
0
0
0
0 (round one decimal place)
0 (round two decimal places)
2018
0
0
0
2019
0
0
0
2020
0
0
0
Terminal
Period
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F05d7fb52-84cc-44aa-9055-ab266c2b1556%2F4ab4a6eb-663d-4d4e-ae40-86ba9c6f7eb6%2Ftr6cpb9_processed.png&w=3840&q=75)
Transcribed Image Text:($ millions)
ROPI (NOPAT-[NOABeg x rw])
Discount factor [1/(1 + rw)t]
Present value of horizon ROPI
Cum present value of horizon ROPI $
Present value of terminal ROPI
NOA
Total firm value
NNO
Firm equity value
Shares outstanding (millions)
Stock price per share
(round 5 decimal places)
$
Reported
2016
$
0
0
2017
Horizon Period
0
0
0
0
0
0
0
0 (round one decimal place)
0 (round two decimal places)
2018
0
0
0
2019
0
0
0
2020
0
0
0
Terminal
Period
0
Transcribed Image Text:Estimating Share Value Using the ROPI Model
Following are forecasts of Whole Foods sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of September 25, 2016.
Reported
Horizon Period
$
millions 2016 2017 2018 2019 2020
Sales $15,724 $15,881 $16,199 $16,523 $16,853
526 524 535 545 556
3,500 3,570 3,642 3,715
NOPAT
NOA
3,466
Terminal
Period
$17,022
562
3,752
Answer the following requirements assuming a discount rate (WACC) of 6%, a terminal period growth rate of 1%, common shares outstanding of 318.3 million, and net nonoperating obligations (NNO) of $242 million.
(a) Estimate the value of a share of Whole Foods' common stock using the residual operating income (ROPI) model as of September 25, 2016.
Rounding instructions:
. Round answers to the nearest whole number unless noted otherwise.
• Use your rounded answers for subsequent calculations.
Do not use negative signs with your answers.
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