Estimating Share Value Using the ROPI Model Following are forecasts of Abercrombie & Fitch's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 2, 2013. Refer to the information in the table to answer the following requirements. Reported Horizon Period (In millions) 2013 2014 2015 2016 2017 Terminal Period Sales $4,511 $4,872 $5,262 $5,683 $6,138 $6,261 NOPAT 242 261 282 305 329 336 NOA 1,446 1,562 1,687 1,821 1,967 2,007 Answer the following requirements assuming a discount rate (WACC) of 10%, a terminal period growth rate of 2%, common shares outstanding of 78.4 million, and net nonoperating obligations (NNO) of $(372) 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 February 2, 2013. Rounding instructions: Round answers to the nearest whole number unless noted otherwise. Use your rounded answers for subsequent calculations. Reported Horizon Period (In millions) 2013 2014 2015 2016 2017 Terminal Period 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) (b) Assume Abercrombie & Fitch (ANF) stock closed at $45.46 on April 2, 2013, the date the 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? What do you believe are some reasons for the difference? Stock prices are a function of many factors. It is impossible to speculate on the reasons for the difference. Our stock price estimate is lower than the ANF market price, indicating that we believe that ANF stock is overvalued. Stock prices are a function of expected NOPAT and NOA, as well as the WACC discount rate. Our lower stock price estimate might be due to more pessimistic forecasts or a higher discount rate compared to other investors' and analysts' model assumptions. Our stock price estimate is lower than the ANF market price, indicating that we believe that ANF stock is overvalued. Stock prices are a function of expected NOPAT and NOA, as well as the WACC discount rate. Our lower stock price estimate might be due to more optimistic forecasts or a lower discount rate compared to other investors' and analysts' model assumptions. Our stock price estimate is lower than the ANF market price, indicating that we believe that ANF stock is undervalued. Stock prices are a function of expected NOPAT and NOA, as well as the WACC discount rate. Our lower stock price estimate might be due to more optimistic forecasts or a lower discount rate compared to other investors' and analysts' model assumptions.