Estimating Share Value Using the ROPI Model
Following are forecasts of Target Corporation's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 30, 2016.

	Reported	Horizon Period				Terminal
$ millions	2016	2017	2018	2019	2020	Period
Sales	$73,785	$75,261	$76,766	$78,301	$79,867	$80,666
NOPAT	3,312	3,387	3,454	3,524	3,594	3,630
NOA	21,445	21,872	22,309	22,755	23,210	23,443

Answer the following requirement assuming a terminal period growth rate of 1%, a discount rate (WACC) of 6%, common shares outstanding of 602 million, and net nonoperating obligations (NNO) of $8,488 million.

The company is contemplating taking the following actions before the end of June 2017. (These actions are not reflected in any of the financial data reported above.) For each of the actions, determine the effect on residual operating income for the fiscal year ended June 30, 2018.

1. Reduce inventory by 10% which reduces accounts payable by 5%.

2. Decrease property, plant and equipment (PPE) by 20% with no consequent impact on NOPAT.
3. Engage in a sale leaseback of a major building. The company will sell 50% of its PPE at book value and increase rental costs by $30 after tax, per year.
4. Increase debt $300, which increases interest expense by $15.

Round answers to one decimal place, if applicable.

	Actual	Forecasted		Action
	June 2017	June 2018		1	2	3	4
NOPAT	Answer	Answer		Answer	Answer	Answer	Answer
NOABeg	Answer	Answer		Answer	Answer	Answer	Answer
ROPI	Answer	Answer		Answer	Answer	Answer	Answer