The following are forecasted residual operating income (ROPI) for Reed Corporation for Year 7:

	Current	Forecast Horizon	Terminal
($millions)	Year 7	Year 8	Year 9	Year 10	Year 11	Year
Residual operating income (ROPI)	$1,999	$2,099	$2,204	$2,314	$2,430	$2,479

Assume a discount rate of 6%, an expected terminal growth rate of 2%, 2017 NOA of $29,896, and 2017 NNO of $17,314. What is the firm's equity value using the ROPI valuation model?

Select one:

a. $79,584

b. $17,314

c. $56,899

d. None of these are correct

e. $72,777

Estimating Share Value Using the ROPI Model

Following are forecasted sales, NOPAT, and NOA for Colgate-Palmolive Company for 2019 through 2022.

		Forecast Horizon Period
Colgate Palmolive (CL)	Reported
$ millions	2018	2019	2020	2021	2022
Sales	$15,544	$16,010	$16,491	$16,985	$17,495
NOPAT	2,737	2,818	2,902	2,989	3,079
NOA	5,837	6,012	6,193	6,378	6,570

Estimate the value of a share of Colgate-Palmolive common stock using the residual operating income (ROPI) model. Assume a discount rate (WACC) of 5.70%, common shares outstanding of 862.9 million, net nonoperating obligations (NNO) of $5,640 million, and noncontrolling interest (NCI) frombthe balance sheet of $299 million. Note: Round answers to two decimal places. $Answer

The forecasts assumed a terminal growth rate of 1%. If the terminal growth rate had been 2%, what would the estimated stock price have been? Note: Round answers to two decimal places. $Answer

What would WACC need to be to warrant the actual stock price on February 21, 2019? Note: Round answer to two decimal places (for example, 0.0674533 = 6.75%). Answer %