Question: Estimating Share Value Using the ROPI Model Following are forecasts of Whole Foods sales, net operating profit after tax (NOPAT), and net operating assets (NOA)

Estimating Share Value Using the ROPI Model Following are forecasts of Whole Foods’ sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of September 25, 2016.

$ millions Reported 2016 Horizon Period Terminal 2017 2018 2019 2020 Period Sales. . . . . . . . . . . . . . . . . $15,724 $15,881 $16,199 $16,523 $16,853 $17,022 NOPAT . . . . . . . . . . . . . . . 526 524 535 545 556 562 NOA . . . . . . . . . . . . . . . . . 3,466 3,500 3,570 3,642 3,715 3,752

a. Estimate the value of a share of Whole Foods’ common stock using the residual operating income

(ROPI) model as of September 25, 2016.

b. Whole Foods stock closed at $30.96 on November 18, 2016, the date the 10-K was filed with the SEC.

How does your valuation estimate compare with this closing price? What do you believe are some reasons for the difference?

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