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 Reported Horizon Period (In millions) 2011 2012 2013 2014 2015 Terminal Period $ 7,853 978 2,796 Sales NOPAT NOA $3,750 $4,500 5,400 6,480 $7,776 815 464 581 679 957 1,350 1,6241,922 2,306 2,798 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. Do not use negative signs with any of your answers. Do not use negative signs with any of your answers. Horizon Period Reported Terminal Period 2011 2013 2014 2015 (In millions) 2012 ROPI (NOPAT . [NOABeg rw]) Discount factor [1/(1+ rwit] (Round 5 decimal places) 0 Present value of horizon ROPI Cum present value of horizon ROPI Present value of terminal ROPI NOA Total firm value NNO Firm equity value Shares outstanding (millions) (round one decimal place) (round two decimal places) Stock price per share 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 Reported Horizon Period (In millions) 2011 2012 2013 2014 2015 Terminal Period $ 7,853 978 2,796 Sales NOPAT NOA $3,750 $4,500 5,400 6,480 $7,776 815 464 581 679 957 1,350 1,6241,922 2,306 2,798 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. Do not use negative signs with any of your answers. Do not use negative signs with any of your answers. Horizon Period Reported Terminal Period 2011 2013 2014 2015 (In millions) 2012 ROPI (NOPAT . [NOABeg rw]) Discount factor [1/(1+ rwit] (Round 5 decimal places) 0 Present value of horizon ROPI Cum present value of horizon ROPI Present value of terminal ROPI NOA Total firm value NNO Firm equity value Shares outstanding (millions) (round one decimal place) (round two decimal places) Stock price per share
