A company reported core operating income of 30 on sales revenue of 250 in 2017 . The book value of net operating assets in the beginning of 2017 was 125 . Sales revenue is expected to grow at 6% in 2018 and 2019 , at 5% in 2020 and at 4% thereafter. a) Forecast sales, operating income, net operating assets and residual operating income for 2018 to 2022 . Use a firm cost of capital of 8%. State your assumptions. b) Use the residual operating income model to compute the firm value. c) Forecast free cash flows and repeat the valuation using the discounted cash flow model. d) The total book value of the net debt is 200 . However, a bank loan with a book value of 80 has a fair value of only 60 . Estimate the intrinsic equity value of the firm. e) Prove (mathematically) that the Residual Operating Income Model and the Discounted Cash Flow Model are equivalent. A company reported core operating income of 30 on sales revenue of 250 in 2017 . The book value of net operating assets in the beginning of 2017 was 125 . Sales revenue is expected to grow at 6% in 2018 and 2019 , at 5% in 2020 and at 4% thereafter. a) Forecast sales, operating income, net operating assets and residual operating income for 2018 to 2022 . Use a firm cost of capital of 8%. State your assumptions. b) Use the residual operating income model to compute the firm value. c) Forecast free cash flows and repeat the valuation using the discounted cash flow model. d) The total book value of the net debt is 200 . However, a bank loan with a book value of 80 has a fair value of only 60 . Estimate the intrinsic equity value of the firm. e) Prove (mathematically) that the Residual Operating Income Model and the Discounted Cash Flow Model are equivalent