Chapter 8: operating income based valuation Practice questions IV Formulae Firm value =NOA+ Present value of expected Residual operating income (ROPI) ROPI = NOPAT (NOA bg WACC) Total firm value =PV of ROPI+PV of terminal value +NOA Value of Equity = Total firm value NNO non-controlling interest (NNC) Net non-operating liabilities (NNO)= Non-operating liabilities - Non-operating Assets Value per share = Value of Equity / No. of outstanding shares Terminal Value =ROPI/r, if g=0, and [ROPI(1+g)]/[rg], if g=0 Practice questions II 1. Suppose that Galaxy Company reported the following forecasted three years financial data. The cost of capital of the company is 8% and its income falls under a tax rate of 30%. Its 2023 financial report shows that the company has a net operating asset value of 120,200 , a net debt balance of 61,484 and outstanding shares of 20,000 . Required: (a) Determine the value per share of Galaxy Company, if the last forecasted Residual income grows at a constant growth rate of 2% for indefinite period. (b) What is the value per share of Galaxy Company, if the last forecasted Residual income remains constant for indefinite period