Question Partially correct Mark 9.00 out of 22.00 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) Sales NOPAT NOA 2011 2012 2013 2014 2015 $3,750 $4,500 $5,400 $ 6,480 $7,776 464 650 818 965 582 1,359 1,631 1,935 2,311 2,760 Ammon 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 $(279) million (negative NNO reflects net nonoperating assets such as investments rather than net obligations). PFlag question (a) Estimate the value of a share of Abercrombie & Fitch common stock using the residual operating income (ROPI) model as of January 29, 2011. (In millions) ROPI (NOPAT- [NOABeg * rw]) Discount factor [1 / (1+rw)t] Present value of horizon ROPI Cum present value of horizon ROPI $ Present value of terminal ROPI 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. Reported NOA Total firm value NNO Firm equity value Shares outstanding (millions) Stock price per share Terminal Period $ $ 7,853 995 2,826 2011 $ (Round5 decimal places) 2012 401 0.88261 354 70.5 * 2,989 * 1,350 * 5,833 x (288) * 6,121 x 86.2 (round one decimal place) 71.01 * (round two decimal places) Horizon Period 2013 463 x 0.779 361 * 2014 559 x 0.68756 385 2015 650 x 0.60685 395 * (b) Assume Abercrombie & Fitch (ANF) stock closed at $77.56 on March 2, 2011. How does your valuation estimate compare with this closing price? What do you believe are some reasons for the difference?

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. 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 $(279) 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. (b) Assume Abercrombie \& Fitch (ANF) stock closed at \$77,56 on March 2, 2011. How does your valuation estimate compare with this closing price? What do you believe are some reasons for the difference