At February 2, 2019, Home Depot (HD) had net operating assets (NOA) of $25,546 million. Using a weighted-average cost of capital (rWACC) of 8.0 percent, the present value of the next four years (FY2019 - FY2022) of the estimated residual operating income (ROPI) is $47,462 million. a. Assume that the ROPIFY2022 at the forecast horizon is $17,300 million. Following the forecast horizon, it is expected that HD's NOPAT will equal 8.0 percent of its NOA. That is, the expected ROPI beyond the forecast horizon is zero. What is Home Depot's operating value at February 2, 2019 using a residual operating income model (ROIM)? With expected NOPAT beyond the forecast horizon equal to 8.0 percent of NOA, there is no residual income. That is, Home Depot is earning at its required return resulting in no expected residual operating earnings. Thus, the continuing value is zero. Home Depot Operating Value: Net operating asset at FY 2018 $25,546 Present value of forecast ROPI 47,462 Continuing value 0 Operating Value $73,008 Home Depot's operating value is $73,008 million