Question: Estimating Share Value Using the ROPI Model Following are forecasted sales, NOPAT, and NOA for Colgate-Palmolive Company for 2019 through 2022. a. Forecast the terminal

 Estimating Share Value Using the ROPI Model Following are forecasted sales,

Estimating Share Value Using the ROPI Model Following are forecasted sales, NOPAT, and NOA for Colgate-Palmolive Company for 2019 through 2022. a. Forecast the terminal period values for Sales, NOPAT, and NOA, assuming a 1% terminal period growth rate. Note: Round answers to the nearest dollar. b. Estimate the value of a share of Colgate-Palmolive common stock using the residual operating income (ROPI) model. Assume a discount rate (WACC) of 5.70\%, common shares outstanding of 862.9 million, net nonoperating obligations (NNO) of $6,486 million, and noncontrolling interest ( NCl ) from the balance sheet of $344 million. Note: Round answers to two decimal places. $ c. Colgate-Palmolive stock closed at $76.71 on February 21, 2019, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? d. The forecasts assumed a terminal growth rate of 1%. If the terminal growth rate had been 2%, what would the estimated stock price have been? Note: Round answers to two decimal places. q e. What would WACC need to be to warrant the actual stock price on February 21, 2019? Note: Round answer to two decimal places (for example, 0.0674533=6.75% ). %

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!