How to get NNO=98
QUESTION 4: Following are financial statement numbers and selected ratios for Katelynn Limited as at, and for the year ended 31 March 2019 (dollars in thousands), and forecast assumptions for the period 2020 through 2023. 2019 Total sales 2019 Net operating profit after tax| (NOPAT) 2019 Net interest expense before tax 2019 Net operating assets (NOA) 2019 Shares outstanding (thousands) 2019 Return on equity (ROE), using year-end Book value of equity Sales growth, 2020 through 2023 Terminal growth rate Net operating profit margin (NOPM) Net operating asset turnover (NOAT), using year-end NOA Weighted average cost of capital (WACC) Corporate tax rate $1,500 $75 $8 $600 100 13.8% 6% 2% 5% 2.5 7% 28% REQUIRED: (a) Given the horizon period from 2020 to 2023, with the terminal year 2024, calculate the residual operating income (ROPI) in 2020, 2021, 2022, 2023, and 2024. (4 marks) (6) Calculate the cumulative present value of horizon period ROPI as at 31 March 2019. (2 marks) (C) Calculate the present value of the terminal value of ROPI as at 31 March 2019. (2 marks) (a) 2019 Total sales 2019 Net operating profit after tax (NOPAT) 2019 Net interest expense before tax 2018 Net operating assets (NOA) 2019 Net operating assets (NOA) 2019 Shares outstanding (thousands) Sales growth, 2020 through 2023 Terminal growth rate Net operating profit margin (NOPM) Net operating asset turnover (NOAT) 2019 Return on equity (ROE) Weighted average cost of capital Corporate tax rate 2019 Net profit after tax (NPAT) 2019 Book value of equity (BVE) $1,500 $75 $8 $560 $600 100 6% 2% 5% 2.5 13.80% 7% 28% $69.24 $502 Sales NOPAT NOA ROPI 2019 $1,500 $75 $600 2020 $1,590 $80 $636 $38 2021 $1,685 $84 $674 $40 2022 $1,787 $89 $715 $42 2023 $1,894 $95 $757 $45 2024 $1,932 $97 $773 $44 (b) Cumulative PV of horizon period ROPI $138 $871 (c) PV of Terminal Value $665 (d) Firm value NNO Value of equity No. of shares outstanding Value per share $1,403 $98 $1,305 100 $13.05 QUESTION 4: Following are financial statement numbers and selected ratios for Katelynn Limited as at, and for the year ended 31 March 2019 (dollars in thousands), and forecast assumptions for the period 2020 through 2023. 2019 Total sales 2019 Net operating profit after tax| (NOPAT) 2019 Net interest expense before tax 2019 Net operating assets (NOA) 2019 Shares outstanding (thousands) 2019 Return on equity (ROE), using year-end Book value of equity Sales growth, 2020 through 2023 Terminal growth rate Net operating profit margin (NOPM) Net operating asset turnover (NOAT), using year-end NOA Weighted average cost of capital (WACC) Corporate tax rate $1,500 $75 $8 $600 100 13.8% 6% 2% 5% 2.5 7% 28% REQUIRED: (a) Given the horizon period from 2020 to 2023, with the terminal year 2024, calculate the residual operating income (ROPI) in 2020, 2021, 2022, 2023, and 2024. (4 marks) (6) Calculate the cumulative present value of horizon period ROPI as at 31 March 2019. (2 marks) (C) Calculate the present value of the terminal value of ROPI as at 31 March 2019. (2 marks) (a) 2019 Total sales 2019 Net operating profit after tax (NOPAT) 2019 Net interest expense before tax 2018 Net operating assets (NOA) 2019 Net operating assets (NOA) 2019 Shares outstanding (thousands) Sales growth, 2020 through 2023 Terminal growth rate Net operating profit margin (NOPM) Net operating asset turnover (NOAT) 2019 Return on equity (ROE) Weighted average cost of capital Corporate tax rate 2019 Net profit after tax (NPAT) 2019 Book value of equity (BVE) $1,500 $75 $8 $560 $600 100 6% 2% 5% 2.5 13.80% 7% 28% $69.24 $502 Sales NOPAT NOA ROPI 2019 $1,500 $75 $600 2020 $1,590 $80 $636 $38 2021 $1,685 $84 $674 $40 2022 $1,787 $89 $715 $42 2023 $1,894 $95 $757 $45 2024 $1,932 $97 $773 $44 (b) Cumulative PV of horizon period ROPI $138 $871 (c) PV of Terminal Value $665 (d) Firm value NNO Value of equity No. of shares outstanding Value per share $1,403 $98 $1,305 100 $13.05
