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Your employer also is considering the acquisition of Hatfield Medical Supplies. You have gathered the following data regarding Hatfield, with all dollars reported in millions:

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Your employer also is considering the acquisition of Hatfield Medical Supplies. You have gathered the following data regarding Hatfield, with all dollars reported in millions: (1) most recent sales of $2,000; (2) most recent total net operating capital, OpCap =$1,120;(3) most recent operating profitability ratio, OP= NOPAT / Sales =4.5%; and (4) most recent capital requirement ratio, CR = OpCap/Sales =56%. You estimate that the growth rate in sales from Year 0 to Year 1 will be 10%, from Year 1 to Year 2 will be 8%, from Year 2 to Year 3 will be 5%, and from Year 3 to Year 4 will be 5%. You also estimate that the long-term growth rate beyond Year 4 will be 5%. Assume the operating profitability and capital requirement ratios will not change. Use this information to forecast Hatfield's sales, net operating profit after taxes (NOPAT), OpCap, free cash flow, and return on invested capital (ROIC) for Years 1 through 4. Also estimate the annual growth in free cash flow for Years 2 through 4 . The weighted average cost of capital (WACC) is 9%. How does the ROIC in Year 4 compare with the WACC? j. What is the horizon value at Year 4 ? What is the total net operating capital at Year 4? Which is larger, and what can explain the difference? What is the

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