(a) Compute Intel's net operating assets (NOA) for year-end 2010. 2010 NOA = $Answer (b) Compute net operating profit after tax (NOPAT) for 2010, assuming a federal and state tax rate of 37%.

HINT: Gains/losses on equity method investments are considered operating income. Round your answer to the nearest whole number. 2010 NOPAT = $Answer (c) Forecast Intel's sales, NOPAT, and NOA for years 2011 through 2014 using the following assumptions:

Sales growth	10%
Net operating profit margin (NOPM)	26%
Net operating asset turnover (NOAT) at fiscal year-end 1.50 (d) Estimate the value of a share of Intel common stock using the residual operating income (ROPI) model as of December 25, 2010; assume a discount rate (WACC) of 11%, common shares outstanding of 5,511 million, and net nonoperating obligations (NNO) of $(21,178) million (NNO is negative which means that Intel has net nonoperating investments). Use your rounded answers for subsequent calculations. (e) Intel (INTC) stock closed at $22.14 on February 18, 2011. How does your valuation estimate compare with this closing price? What do you believe are some reasons for the difference? What investment decision is suggested from your results? (Select all that apply) Answeryesno Our stock price estimate is higher than the INTC market price as of February 18, 2011, indicating that we believe the stock is undervalued. Answeryesno Our lower stock price estimate may be due to more pessimistic forecasts or a higher discount rate compared to other investors' and analysts model assumptions. Answeryesno Stock prices are a function of expected NOPAT and NOA, as well as the WACC discount rate. Answeryesno Our higher stock price estimate may be due to more optimistic forecasts or a lower discount rate compared to other investors' and analysts model assumptions.

Estimating Share Value Using the ROPI Model Assume the following are the income statement and balance sheet for Intel Corporation. INTEL CORPORATION Consolidated Statements of Income Year Ended (In millions) Dec. 25, 2010 Dec. 26, 2009 Dec. 27, 2008 44,223 35,127 37,586 Net revenue 15,566 16,742 Cost of sales 15,132 29,091 19,561 20,844 Gross margin Research and development 6,576 5,653 5,722 7,931 Marketing, general and adminstrative 6,309 5,452 Restructuring and asset impairment charges 231 710 Amortization of acquisition-related intangibles 11,890 13,850 12,903 Operating expenses Operating income 16,188 5,711 8,954 Gains (losses) on equity method investments, net* (1,380) (147) Gains (losses) on other equity investments, net 231 (23) (376) 109 163 488 Interest and other, net Income before taxes 16,645 5,704 7,686 1,335 2,394 4,581 Provisions for taxes 12,064 Net income 4,369 5,292 *This should be considered as operating income