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Calculate expected residual operating income

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Reference no: EM133028812

Question - You are analyzing a company who just filed their fiscal 2020 financial statements.

Reported figures for 2020 include the following:

Sales = 100,000

Net operating profit after tax (NOPAT) = 25,000

Net operating assets (NOA) = 50,000

Forecasted numbers and assumptions for 2021 include the following:

Sales growth = 10%

Net operating profit margin (NOPM) = 25%

Net operating asset turnover (NOAT) = 2.00

Weighted average cost of capital (WACC) = 8%

Please answer each of these three questions succinctly below (and label appropriately).

1. Calculate expected residual operating income (ROPI) for 2021.

2. Calculate the present value of expected residual operating income (ROPI) for 2021 as of January 1, 2021.

3. In a single sentence, define residual operating income (ROPI).

Reference no: EM133028812

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