E15.10. Forecasting and Valuation for General Mills, Inc. (Easy) The following are from the financial statements for General Mills (in millions): 2008 2007 Net operating assets $12,847 $12,297 Common equity 6,216 5,319 Sales 13,652 Core operating income (after tax) 1,560 At the end of fiscal year 2008, 337.5 million shares were outstanding, and they traded at $60 each. The following forecasts were prepared: Sales growth rate, 2009-2010 Sales growth rate, 2011-2012 9% per year 6% per year Sales growth rate after 2012 5% per year Prepare a pro forma for the years 2009-2012 with a forecast that core profit margins and asset turnovers will be the same as in 2008. Then calculate the per-share value at the end of fiscal year 2008 with the forecast that residual operating income will grow after 2012 at the sales growth rate. Use a required return for operations of 8 percent.

Real World Connection Exercises on General Mills are E1.5, E2.9, E3.9, E4.9, E6.8, E10.9, E13.15, and E14.8.