**Questions**

A)Estimate the value of a share of Nike common stock using the residual operationg income (ROPI) model as of may 31, 2016. For simplicity, prepare your forecasts in the $ millions. Use the following assumptions:

Sales Growth = 6%

Net Operating Profit margin ....2016 Ratios rounded to 3 decimal places

Net operating asset Turnover (NOAT) Year End....2016 Ratios rounded to 3 decimal Places

B) Nike's stock closed at $56.99 on July 21, 2016, the date the form 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? What investment decision is suggested from your results?

L02 P14-29. Forecasting with the Parsimonious Method and Estimating Share Value Using the ROPI Model Following are the income statement and balance sheet for Nike Inc. NIKE INC. (NKE) NIKE INC. Consolidated Income Statement May 31, 2016 May 31, 2015 For Year Ended ($ millions) $32,376 17,405 14,971 3,278 7,191 10,469 $30,601 16,534 14,067 3,213 6,679 9,892 28 (58) 4,205 Cost of sales. .. Demand creation expense Operating overhead expense Total selling and administrative expense Interest expense (income), net Other (income) expense, net . Income before income taxes . . . . . . . . . Income tax expense... 19 (140) 4,623 863 . . 932 3,760 $ 3,273 L02 P14-29. Forecasting with the Parsimonious Method and Estimating Share Value Using the ROPI Model Following are the income statement and balance sheet for Nike Inc. NIKE INC. (NKE) NIKE INC. Consolidated Income Statement May 31, 2016 May 31, 2015 For Year Ended ($ millions) $32,376 17,405 14,971 3,278 7,191 10,469 $30,601 16,534 14,067 3,213 6,679 9,892 28 (58) 4,205 Cost of sales. .. Demand creation expense Operating overhead expense Total selling and administrative expense Interest expense (income), net Other (income) expense, net . Income before income taxes . . . . . . . . . Income tax expense... 19 (140) 4,623 863 . . 932 3,760 $ 3,273