Please provide a valid response. For this question pertaining to forecasting wit

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Please provide a valid response. For this question pertaining to forecasting with the parsimonious method and estimating share value using the ROPI model, please let me know where I went wrong with my answers. Please solve the problem in its entirity and show your steps to your calculations.

QUESTION 2 Partially correct 0.29 points out of 1.00 Fg question Forecasting with the Parsimonious Method and Estimating Share Value Using the ROPI Model Following are the income statement and balance sheet for Cisco Sytems for the year ended July 30, 2016. Cisco Sytems Consolidated Statements of Income July 30, July 25, 2016 2015 Years Ended December (S millions) Revenue Product Service Total revenue Cost of sales Product Service Total cost of sales 537,254 S37,750 1,993 11,411 49,247 49,161 4,161 15,377 4,126 4103 8,287 19,480 30,960 29,681 Gross margin Operating expenses Research and development Sales and marketing General and administrative 6,296 6,207 9,619 9,821 1,814 2,040 Amortization of purchased intangible assets 303 359 484 268 Restructuring and other charges Total operating expenses Operating income Interest income Interest expense Other income (loss), net Interest and other income (loss), net 18,300 18,911 2,660 10,770 769 (676) (566) (69) 228 260 431 Income before provision for income taxes 12,920 11,201 2,181 2,220 $10,739 $8,981 1,005 Provision for income taxes Net income Cisco Sytems Inc. Consolidated Balance Sheets July 30, 2016 July 25 n15 In millions, except par value

Explanation / Answer

a) Net Operating Assets

Particulars

$

$

Total Assets

121652

Less: Non Operating assets

           Investments

           Cash

           Financing receivables

58125

7631

4272

Operating assets

51624

Less: All liabilitites

58067

Add: Financial Liabilities

          LT Debt

          ST Debt

24483

1056

NOA

19096

b) Net operating profit Margin = Operating Profit/ Sales

Particulars

$

$

Net Income

12920

Add : Non operating expenses

Interest expense

676

Less: Non operating Incomes

Interest income

1005

Operating Income before tax

12591

Tax @37%

4658.37

NOPAT

7932.33

Sales

49247

Operating profit Margin

16%

c) Forecasting of sales, Nopat and NOA

Particulars

2016

2017

2018

2019

2020

Terminal

Nopat(21.5% of turnover)

10588

10694

10908

11126

11349

11462

NOA(turnover/ 1.86)

26477

26742

27277

27514

28382

28662

d)

d) Estimating value of the share

Particulars

2016

2017

2018

2019

2020

Terminal

ROPI

7940

8020

8180

8375

8511

8596

DF

.90909

.82645

.75131

.68301

.62092

Present Value

7218

6628

6146

5720

5285

Cumm PV of Horizon ROPI =      30997

PV of terminal ROPi         =          59305               (8596/.09 *.62092)

Total                                   =          90302

NOA                                                    19096

Firm VaLue                                        109398

NNO                                                + 37113

NCI                                                             1

Firm Equity value                         146510     

value per share (146510/5029)    29.13     

Particulars

$

$

Total Assets

121652

Less: Non Operating assets

           Investments

           Cash

           Financing receivables

58125

7631

4272

Operating assets

51624

Less: All liabilitites

58067

Add: Financial Liabilities

          LT Debt

          ST Debt

24483

1056

NOA

19096

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