Question
Estimating Share Value Using the ROPI Model Assume following are forecasts of Abercrombie & Fitch's sales, net operating profit after tax (NOPAT), and net operating
Estimating Share Value Using the ROPI Model Assume 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.
Sales | $ 3,750 | $ 4,500 | $ 5,400 | $ 6,480 | $ 7,776 | $ 7,853 |
NOPAT | 464 | 581 | 679 | 815 | 957 | 978 |
NOA | 1,350 | 1,624 | 1,922 | 2,306 | 2,798 | 2,796 |
Answer the following requirements assuming a discount rate (WACC) of 13.3%, a terminal period growth rate of 1%, common shares outstanding of 86.2 million, and net nonoperating obligations (NNO) of $(288) million (negative NNO reflects net nonoperating assets 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.
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 | |||||
Plus negative NNO | Answer | (enter as negative number) | ||||
Firm equity value | $Answer | |||||
Shares outstanding (millions) | Answer | (round one decimal place) | ||||
Stock price per share | $Answer | (round two decimal places) |
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