Estimating Share Value Using the ROPI Model Following are forecasts of sales, net operating profit after...

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Estimating Share Value Using the ROPI Model Following are forecasts of sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of December 31, 2018, for Humana. Note: Complete the entire question in Excel and format each answer to two decimal places. Then enter the answers into the provided spaces below with two decimal places. Reported Terminal Horizon period NOA millions 2018 2019 2020 2021 2022 Period Sales $56,816 $57,670 $58,536 $59,416 $60,308 $60,912 NOPAT 2,492 2,542 2,580 2,619 2,658 2,684 3,936 4,001 4,062 4,125 4,188 4,231 Answer the following requirements with the following assumptions: Assumptions Terminal period growth rate Discount rate (WACC) Common shares outstanding 196 7.8% 135.6 million Net nonoperating obligations (NNO) $(6,225) million NNO is negative because Humana's nonoperating assets exceed its nonoperating liabilities. (a) Estimate the value of a share of common stock using the residual operating income (ROPI) model as of December 31, 2018. ($ millions) Reported 2018 Forecast Horizon Terminal 2019 2020 2021 2022 Period ROPI (NOPAT -[NOABeg x rw]) $ $ $ $ $ Present value of horizon ROPI Cum present value of horizon ROPI $ Present value of terminal ROPI NOA Total firm value Less NNO Firm equity value $ Shares outstanding (millions) $ Stock price per share (b) Humana (HUM) stock closed at $307.56 on February 21, 2019, the date the 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? Estimating Share Value Using the ROPI Model Following are forecasts of sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of December 31, 2018, for Humana. Note: Complete the entire question in Excel and format each answer to two decimal places. Then enter the answers into the provided spaces below with two decimal places. Reported Terminal Horizon period NOA millions 2018 2019 2020 2021 2022 Period Sales $56,816 $57,670 $58,536 $59,416 $60,308 $60,912 NOPAT 2,492 2,542 2,580 2,619 2,658 2,684 3,936 4,001 4,062 4,125 4,188 4,231 Answer the following requirements with the following assumptions: Assumptions Terminal period growth rate Discount rate (WACC) Common shares outstanding 196 7.8% 135.6 million Net nonoperating obligations (NNO) $(6,225) million NNO is negative because Humana's nonoperating assets exceed its nonoperating liabilities. (a) Estimate the value of a share of common stock using the residual operating income (ROPI) model as of December 31, 2018. ($ millions) Reported 2018 Forecast Horizon Terminal 2019 2020 2021 2022 Period ROPI (NOPAT -[NOABeg x rw]) $ $ $ $ $ Present value of horizon ROPI Cum present value of horizon ROPI $ Present value of terminal ROPI NOA Total firm value Less NNO Firm equity value $ Shares outstanding (millions) $ Stock price per share (b) Humana (HUM) stock closed at $307.56 on February 21, 2019, the date the 10-K was filed with the SEC. How does your valuation estimate compare with this closing price?