1. Compute net operating assets (NOA) for 2016. 2. Compute net operating profit after tax (NOPAT) for 2016, assuming a federal and state statutory tax rate of 37%. (Round your answer to the nearest whole number.) 3. Forecast Cisco's sales, NOPAT, and NOA for years 2017 through 2020 and the terminal period using the following assumptions: Sales growth 2017 - 2%

Sales growth 2018-2020 - 3%

Terminal growth - 1%

Net operating profit margin --> 2016 rate rounded to three decimal places

Net operating asset turnover ---> 2016 rate rounded to three decimal places

July 25, 2015 Cisco Systems Inc. Consolidated Statements of Income Years Ended December ($ millions) July 30, 2016 Revenue Product $37,254 Service 11,993 Total revenue 49,247 $37,750 11,411 49,161 Cost of sales Product Service Total cost of sales Gross margin 14,161 4,126 18,287 30,960 15,377 4,103 19,480 29,681 6,296 9,619 1,814 303 268 18,300 12,660 6,207 9,821 2,040 359 484 18,911 10,770 Operating expenses Research and development Sales and marketing General and administrative Amortization of purchased intangible assets Restructuring and other charges Total operating expenses Operating income Interest income Interest expense Other income (loss), net Interest and other income (loss), net Income before provision for income taxes Provision for income taxes Net income 1,005 (676) (69) 260 12,920 2,181 769 (566) 228 431 11,201 2,220 $10,739 $8,981 Cisco Systems Inc. Consolidated Balance Sheets In millions, except par value July 30, 2016 July 25, 2015 44,516 43,592 Cisco shareholders' equity Preferred stock, no par value: 5 shaes authorized; none issued and outstanding Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 5,029 and 5,085 shares issued and outstanding at July 30, 2016 and July 25, 2015, respectively Retained earnings Accumulated other comprehensive income (loss) Total Cisco shareholders' equity Noncontrolling interests Total equity 19,396 (326) 63,586 (1) 16,045 61 59,698 63,585 59,707 Total liabilities and equity $121,652 $113,373 Cisco Systems Inc. Consolidated Balance Sheets In millions, except par value July 30, 2016 July 25, 2015 Assets $7,631 58,125 017 $6,877 53,539 5,344 Current assets Cash and cash equivalents Investments Accounts receivable, net of allowance for doubtful accounts of $249 at July 30, 2016 and $302 at July 25, 2015 Inventories Financing receivables, net Other current assets Total current assets Property and equipment, net Financing receivables, net Goodwill Purchased intangible assets, net Deferred tax assets Other assets Total assets 1,217 4,272 1,627 78,719 3,506 4,158 26,625 2,501 4,299 1,844 $121,652 1,627 4,491 1,490 73,368 3,332 3,858 24,469 2,376 4,454 1,516 $113,373 Liabilities Current liabilities $3,897 1,104 62 Short-term debt Accounts payable Income taxes payable Accrued compensation Deferred revenue Other current liabilities $4,160 1,056 517 2,951 10,155 6,072 24,911 Total current liabilities Long-term debt Income taxes payable Deferred revenue Other long-term liabilities Total liabilities 24,483 925 6,317 1,431 58,067 3,049 9,824 5,476 23,412 21,457 1,876 5,359 1,562 53,666 July 25, 2015 Cisco Systems Inc. Consolidated Statements of Income Years Ended December ($ millions) July 30, 2016 Revenue Product $37,254 Service 11,993 Total revenue 49,247 $37,750 11,411 49,161 Cost of sales Product Service Total cost of sales Gross margin 14,161 4,126 18,287 30,960 15,377 4,103 19,480 29,681 6,296 9,619 1,814 303 268 18,300 12,660 6,207 9,821 2,040 359 484 18,911 10,770 Operating expenses Research and development Sales and marketing General and administrative Amortization of purchased intangible assets Restructuring and other charges Total operating expenses Operating income Interest income Interest expense Other income (loss), net Interest and other income (loss), net Income before provision for income taxes Provision for income taxes Net income 1,005 (676) (69) 260 12,920 2,181 769 (566) 228 431 11,201 2,220 $10,739 $8,981 Cisco Systems Inc. Consolidated Balance Sheets In millions, except par value July 30, 2016 July 25, 2015 44,516 43,592 Cisco shareholders' equity Preferred stock, no par value: 5 shaes authorized; none issued and outstanding Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 5,029 and 5,085 shares issued and outstanding at July 30, 2016 and July 25, 2015, respectively Retained earnings Accumulated other comprehensive income (loss) Total Cisco shareholders' equity Noncontrolling interests Total equity 19,396 (326) 63,586 (1) 16,045 61 59,698 63,585 59,707 Total liabilities and equity $121,652 $113,373 Cisco Systems Inc. Consolidated Balance Sheets In millions, except par value July 30, 2016 July 25, 2015 Assets $7,631 58,125 017 $6,877 53,539 5,344 Current assets Cash and cash equivalents Investments Accounts receivable, net of allowance for doubtful accounts of $249 at July 30, 2016 and $302 at July 25, 2015 Inventories Financing receivables, net Other current assets Total current assets Property and equipment, net Financing receivables, net Goodwill Purchased intangible assets, net Deferred tax assets Other assets Total assets 1,217 4,272 1,627 78,719 3,506 4,158 26,625 2,501 4,299 1,844 $121,652 1,627 4,491 1,490 73,368 3,332 3,858 24,469 2,376 4,454 1,516 $113,373 Liabilities Current liabilities $3,897 1,104 62 Short-term debt Accounts payable Income taxes payable Accrued compensation Deferred revenue Other current liabilities $4,160 1,056 517 2,951 10,155 6,072 24,911 Total current liabilities Long-term debt Income taxes payable Deferred revenue Other long-term liabilities Total liabilities 24,483 925 6,317 1,431 58,067 3,049 9,824 5,476 23,412 21,457 1,876 5,359 1,562 53,666