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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. Reported Horizon Period (In millions) 2011 2012 2013 2014 2015 Terminal Period Sales $ 3,750 $ 4,500 $ 5,400 $ 6,480 $ 7,776 $ 7,853 NOPAT 464 582 650 818 965 995 NOA 1,359 1,631 1,935 2,311 2,760 2,826 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 $(279) 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. Use your rounded answers for subsequent calculations.
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The paper provides an estimation of share value using the ROPI Model.The calculations of share value are determined from the provided net operating profit after tax (NOPAT), and net operating assets (NOA) years between 2011 and 2015. A cumulative present value of the company is calculated by adding the corresponding present values for each year. This cumulative value is then used to determine the company's share value for 2011.
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