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Estimate the value of a share of abercrombie

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Reference no: EM131780233

Estimating Share Value Using the ROPI Model 

Assume following are forecasts of Abercrombie & Fitch's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 29, 2011. Refer to the information in the table to answer the following requirements.

Sales $ 3,750 $ 4,500 $ 5,400 $ 6,480 $ 7,776 $ 7,853
NOPAT 464 581 679 815 957 978
NOA 1,350 1,624 1,922 2,306 2,798 2,796

Answer the following requirements assuming a discount rate (WACC) of 13.3%, a terminal period growth rate of 1%, common shares outstanding of 86.2 million, and net nonoperating obligations (NNO) of $(288) million (negative NNO reflects net nonoperating assets such as investments rather than net obligations).

(a) Estimate the value of a share of Abercrombie & Fitch common stock using the residual operating income (ROPI) model as of January 29, 2011. Rounding instructions: Round answers to the nearest whole number unless noted otherwise. Use your rounded answers for subsequent calculations.

ROPI (NOPAT - [NOABeg × rw])   Answer         Answer         Answer         Answer         Answer        
Discount factor [1 / (1 + rw)t ](round 5 decimal places)   Answer         Answer         Answer         Answer          
Present value of horizon ROPI   Answer         Answer         Answer         Answer          
Cum present value of horizon ROPI $ Answer                  
Present value of terminal ROPI Answer                  
NOA Answer                  
Total firm value Answer                  
Plus negative NNO Answer         
 (enter as 
negative number)		        
Firm equity value $Answer                  
Shares outstanding (millions) Answer      (round one
decimal place)		        
Stock price per share $Answer         (round two 
decimal places)

Reference no: EM131780233

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