Estimating Share Value Using the ROPI Model Assume the following are the income statement and balance sheet for CVS Caremark.

CVS CAREMARK INC. Consolidated Statements of Income
(In millions)	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Net revenues	$ 123,133	$ 107,100	$ 95,778
Cost of revenues	100,627	86,539	75,559
Gross profit	22,506	20,561	20,219
Operating expenses	15,278	14,231	14,082
Operating profit	7,228	6,330	6,137
Interest expense, net	557	584	536
Loss on early extinguishment of debt	348	--	--
Income before income tax provision	6,323	5,746	5,601
Income tax provision	2,441	2,258	2,179
Income from continuing operations	3,882	3,488	3,422
Income (loss) from discontinued operations, net of tax	(7)	(31)	2
Net income	3,875	3,457	3,424
Net loss attributable to noncontrolling interest	2	4	3
Net income attributable to CVS Caremark	$ 3,877	$ 3,461	$ 3,427

CVS CAREMARK INC. Balance Sheets
(In millions, except per share amounts)	Dec. 31, 2012	Dec. 31, 2011
Assets
Cash and cash equivalents	$ 1,375	$ 1,413
Short-term investments	5	5
Accounts receivables, net	6,473	6,047
Inventories	10,759	10,046
Deferred tax assets	663	503
Other current assets	577	580
Total current assets	19,852	18,594
Propertyand equipment, net	8,632	8,467
Goodwill	26,395	26,458
Intangible assets, net	9,753	9,869
Other assets	1,280	1,155
Total assets	$65,912	$64,543
Liabilities
Accounts payable	$ 5,070	$ 4,370
Claims and discounts payable	3,974	3,487
Accrued expenses	4,051	3,293
Short-term debt	690	750
Current portion of long-term debt	5	56
Total current liabilities	13,790	11,956
Long-term debt	9,133	9,208
Deferred income taxes	3,784	3,853
Other long-term liabilities	1,501	1,445
Redeemable noncontrolling interest	--	30
Shareholders' equity:
Preferred stock, par value $0.01:0.1 shares authorized; none issued or outstanding	--	--
Common stock, $0.01 par value, 3,200 shares authorized; 1,667 issued and 1,231 shares outstanding at December 31, 2012 and 1,640 shares issued and 1,298 shares outstanding at December 31, 2011	17	16
Treasury stock at cost: 435 shares at December 31, 2012 and 340 shares at December 31, 2011	(16,270)	(11,953)
Shares held in trust: 1 share at December 31, 2012 and 2 shares at December 31, 2011	(31)	(56)
Capital surplus	29,120	28,126
Retained earnings	25,049	22,090
Accumulated other comprehensive loss	(181)	(172)
Total shareholders' equity	37,704	38,051
Total liabilities and shareholders' equity	$65,912	$64,543

(a) Compute CVS's net operating assets (NOA) as of December 31, 2012. 2012 NOA = $Answer (b) Compute net operating profit after tax (NOPAT) for 2012, assuming a federal and state statutory tax rate of 37%.(Round your answer to the nearest whole number.) 2012 NOPAT = $Answer (c) Forecast CVS's sales, NOPAT, and NOA for 2013 through 2016 using the following assumptions:

Sales growth	10%
Net operating profit margin (NOPM)	3.6%
Net operating asset turnover (NOAT) at fiscal year-end	2.67

Forecast the terminal period value using the assumptions above and assuming a terminal period growth of: 1%.

CVS	Reported	Forecast Horizon				Terminal
($ millions)	2012	2013 Est.	2014 Est.	2015 Est.	2016 Est.	Period
Sales (rounded two decimal places)	$Answer	$Answer	$Answer	$Answer	$Answer	$Answer
Sales (rounded nearest whole number)	$Answer	$Answer	$Answer	$Answer	$Answer	$Answer
NOPAT (rounded nearest whole number)*	Answer	Answer	Answer	Answer	Answer	Answer
NOA (rounded nearest whole number)*	Answer	Answer	Answer	Answer	Answer	Answer

(d) Estimate the value of a share of CVS common stock using the residual operating income (ROPI) model as of December 31, 2012; assume a discount rate (WACC) of 7%, common shares outstanding of 1,231 million, and net nonoperating obligations (NNO) of $8,448 million. Use your rounded answers for subsequent calculations.

CVS	Reported	Forecast Horizon				Terminal
($ millions)	2012	2013 Est.	2014 Est.	2015 Est.	2016 Est.	Period
ROPI Model
ROPI [NOPAT-(NOA beg X WACC)] (rounded to nearest whole number)		Answer	Answer	Answer	Answer	Answer
Discount factor (rounded to 5 decimal places)		Answer	Answer	Answer	Answer
Present value of horizon ROPI (rounded to nearest whole number)		Answer	Answer	Answer	Answer
Cum present value of horizon ROPI	$Answer	(rounded to nearest whole number)
Present value of terminal ROPI	Answer	(rounded to nearest whole number)
NOA	Answer	(rounded to nearest whole number)
Total firm value	Answer	(rounded to nearest whole number)
Less NNO	Answer	(rounded to nearest whole number)
Firm equity value	$Answer	(rounded to nearest whole number)
Shares outstanding (millions)	Answer	(rounded to nearest whole number)
Stock price per share	$Answer	(rounded to two decimal places)