Suppose XYZ Inc has $$1$ billion in sales and its Net Operating Capital is $$500$ million. Its current Operating Profitability $($OP$=$NOPAT$/$Sales$)$ is $10\%$ and Capital Ratio is $0\mathrm{.}5.$ Company's cost of capital is $15\%.$ If XYZ is expected to grow its revenues at a $10\%$ rate in the next $5$ years. After five years XYZ$\text{'}$s growth rate drops to $3\%$ and continues at that rate perpetually. What is company's ROIC in year $1.$

Question options:

$10\%$

$20\%$

$30\%$

$5\%$

Suppose XYZ Inc has $$1$ billion in sales and its Net Operating Capital is $$500$ million. Its current Operating Profitability $($OP$=$NOPAT$/$Sales$)$ is $10\%$ and Capital Ratio is $0\mathrm{.}5.$ Company's cost of capital is $15\%.$ If XYZ is expected to grow its revenues at a $10\%$ rate in the next $5$ years. After five years XYZ$\text{'}$s growth rate drops to $3\%$ and continues at that rate perpetually. Based on this information answer the following questions:

What is the best estimate of Horizon$/$Continuing$/$Terminal Value of XYZ as or year $0?$

Hint; Horizon$/$Continuing$/$Termina Value is the PV of free cash flows received after year $5$ as of you year $5.$ The HV as of year $0,$ is the present value of the HV discounted to time $0.$

Question options:

$375$ million

$300$ million

$475$ million

$525$ million

Suppose XYZ Inc has $$1$ billion in sales and its Net Operating Capital is $$500$ million. Its current Operating Profitability $($OP$=$NOPAT$/$Sales$)$ is $10\%$ and Capital Ratio is $0\mathrm{.}5.$ Company's cost of capital is $15\%.$ If XYZ is expected to grow its revenues at a $10\%$ rate in the next $5$ years. After five years XYZ$\text{'}$s growth rate drops to $3\%$ and continues at that rate perpetually. What is the best estimate of XYZ$\text{'}$s Value of Operating assets based on the current growth projections, profitability and investment rate?

Question options:

$614$ million

$814$ million

$1\mathrm{.}2$ billion

$314$ million