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$($a$)$ compute the return on assets $($ROA$)$ and return on equity $($ROE$)$ for $2016(8$ points$)($b$)$ Complete the DuPont disaggregation of return on equity $($ROE$)$ for $2016.$ Analyze the DuPont financial ratios and discuss how Cisco Systems Inc. can achieve a high ROE. $(12$ points$)($c$)$ Compute net operating assets $($NOA$)$ for $2016.$ Note, for the balance sheet items of Cisco Systems, non$-$operating assets include cash and cash equivalents, and investments. Nonoperating liabilities include short$-$term debt and long$-$term debt. $(6$ points$)($d$)$ Compute net operating profit after tax $($NOPAT$)$ for $2016,$ assuming a federal and state statutory tax rate of $37\%.($Round your answer to the nearest whole number.$)(9$ points$)($e$)$ Forecast Cisco's sales, NOPAT, and NOA for years $2017$ through $2020$ and the terminal period using the following assumptions: $(12$ points$)$ Sales growth $20178\%$ Sales growth $20188\%$ Sales growth $20195\%$ Sales growth $20203\%$ Terminal growth $2\%$ Net operating profit margin $2016$ rate rounded to three decimal places Net operating asset turnover $2016$ rate rounded to three decimal places Assume a discount rate $($WACC$)$ of $10\%,$ common shares outstanding of $5,029$ million, and net nonoperating obligations $($NNO$)$ of $$(37,113)$ million $($NNO is negative which means that Cisco has net nonoperating investments$).($f$)$ Estimate the value of a share of Cisco common stock as of July $30,2016$ using the discounted cash flow $($DCF$)$ model and sales, NOPAT and NOA forecast in $($e$)$; Describe the DCF model, and explain the computations and results. $(15$ points$)6($g$)$ Cisco stock closed at $$31\mathrm{.}47$ on September $8,2016,$ the date the Form $10-$K was filed with the SEC. How does your DCF valuation estimates compare with this closing price? What do you believe are some reasons for the difference? What investment decision is suggested from your results? $(8$ points$)($h$)$ Assume that Cisco$$s weighted average cost of capital $($WACC$)$ increased to $15\%$ due to the high inflation. Estimate the value of a share of Cisco common stock as of July $30,2016,$ using the discounted cash flow $($DCF$)$ model and the forecast in $($e$)$; Describe the computations, and discuss how the increase in WACC affects Cisco$$s stock price. $(10$ points$)$ Note, still assume common shares outstanding of $5,029$ million, and net nonoperating obligations $($NNO$)$ of $$(37,113)$ million. $($i$)$ Discuss how inflation, federal monetary policy, credit ratings, and sales growth opportunities affect Cisco$$s equity valuation based on the DCF and CAPM models. $(8$ points$)($j$)$ Are there other equity valuation models? Please discuss the advantages and disadvantages of different equity valuation models. $(12$ points$)$

Following are the income statement and balance sheet for Cisco Systems for the year ended

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Step $1$

$($a$)$ Return on Assets $($ROA$)$ for $2016$:

Explanation:

Step $1$: The net income for $2016$ is given as $$10,739$ million. This represents the profit earned by Cisco Systems during that year.

Step $2$: To calculate the average total assets, we need to find the average of the beginning and ending total assets. In this case, the beginning total assets are $$113,373$ million, and the ending total assets are $$121,652$ million. Adding these two values and dividing by $2$ gives us an average total assets of $$117,513\mathrm{.}5$ million. Step $3$: To find the ROA, divide the net income by the average total assets: $$10,739$ million $/$ $$117,513\mathrm{.}5$ million $0\mathrm{.}0914$ or $9\mathrm{.}14\%.$ This percentage represents the return earned on each dollar of assets invested.

Step $2$

$($b$)$ DuPont Analysis of Return on Equity $($ROE$)$ for $2016$:

Explanation:

Step $1$: The net profit margin is calculated by dividing the net income $($$$10,739$ million$)$ by the total revenue $($$$49,247$ million$).$ This gives us a net profit margin of approximately $0\mathrm{.}2180$ or $21\mathrm{.}80\%.$ It indicates the percentage of each dollar of revenue that translates into profit.

Step $2$: The asset turnover is determined by dividing the total revenue $($$$49,247$ million$)$ by the average total assets $($$$117,513\mathrm{.}5$ million$).$ This results in an asset turnover of approximately $0\mathrm{.}4187$ or $41\mathrm{.}87\%.$ It represents the efficiency of utilizing assets to generate revenue.

Step $3$: The equity multiplier is calculated by dividing the average total assets $($$$117,513\mathrm{.}5$ million$)$ by the average total equity $($$$63,585$ million$).$ This gives us an equity multiplier of approximately $1\mathrm{.}8475$ or $184\mathrm{.}75\%.$ It indicates the leverage or financial leverage used by the company.

Step $4$: To find the ROE, multiply the net profit margin, asset turnover, and equity multiplier together: $0\mathrm{.}2180*0\mathrm{.}4187*1\mathrm{.}84750\mathrm{.}1687$ or $16\mathrm{.}87\%.$ This percentage represents the return earned on each dollar of equity invested.

Step $3$

$($c$)$ Net Operating Assets $($NOA$)$ for $2016$:

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