Estimating Share Value Using the ROPI Model The following are forecasts of Abercrombie & Fitch's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 29, 2011. Refer to the information in the table to answer the following requirements. Reported Horizon Period (In millions) 2011 2012 2013 2014 2015 Terminal Period Sales $ 3,469 $ 3,989 $ 4,587 $ 5,275 $ 6,066 $ 6,187 NOPAT 152 319 367 422 485 495 NOA 1,032 1,173 1,349 1,551 1,784 1,820 Answer the following requirements assuming a discount rate (WACC) of 10%, a terminal period growth rate of 2%, common shares outstanding of 87.2 million, and net nonoperating obligations (NNO) of $(858) million. (Negative NNO reflects net nonoperating assests such as investments rather than net obligations) (a) Estimate the value of a share of Abercrombie & Fitch common stock using the residual operating income (ROPI) model as of January 29, 2011. 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 any of your answers. Reported Horizon Period (In millions) 2011 2012 2013 2014 2015 Terminal Period ROPI (NOPAT - [NOABeg × rw]) Answer Answer Answer Answer Answer Discount factor [1 / (1 + rw)t ] (round 5 decimal places) Answer Answer Answer Answer Present value of horizon ROPI Answer Answer Answer Answer Cum present value of horizon ROPI Answer Present value of terminal ROPI Answer NOA Answer Total firm value Answer NNO Answer Firm equity value Answer Shares outstanding (millions) Answer (round one decimal place) Stock price per share Answer (round two decimal places)
Estimating Share Value Using the ROPI Model
The following are
Reported | Horizon Period | |||||
---|---|---|---|---|---|---|
(In millions) | 2011 | 2012 | 2013 | 2014 | 2015 | Terminal Period |
Sales | $ 3,469 | $ 3,989 | $ 4,587 | $ 5,275 | $ 6,066 | $ 6,187 |
NOPAT | 152 | 319 | 367 | 422 | 485 | 495 |
NOA | 1,032 | 1,173 | 1,349 | 1,551 | 1,784 | 1,820 |
Answer the following requirements assuming a discount rate (WACC) of 10%, a terminal period growth rate of 2%, common shares outstanding of 87.2 million, and net nonoperating obligations (NNO) of $(858) million. (Negative NNO reflects net nonoperating assests such as investments rather than net obligations)
(a) Estimate the value of a share of Abercrombie & Fitch common stock using the residual operating income (ROPI) model as of January 29, 2011.
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 any of your answers.
Reported | Horizon Period | |||||
---|---|---|---|---|---|---|
(In millions) | 2011 | 2012 | 2013 | 2014 | 2015 | Terminal Period |
ROPI (NOPAT - [NOABeg × rw]) | Answer
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Answer
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Answer
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Answer
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Answer
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Discount factor [1 / (1 + rw)t ] | (round 5 decimal places) | Answer
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Answer
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Answer
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Answer
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Present value of horizon ROPI | Answer
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Answer
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Answer
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Answer
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Cum present value of horizon ROPI | Answer
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Present value of terminal ROPI | Answer
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NOA | Answer
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Total firm value | Answer
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NNO | Answer
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Firm equity value | Answer
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Shares outstanding (millions) | Answer
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(round one decimal place) | ||||
Stock price per share | Answer
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(round two decimal places) |
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