The residual operating income (ROPI) model estimates firm value as the current book value of net operating assets plus the present value of expected residual operating income.

Question

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The Residual Operating Income (ROPI) model values a firm by adding its current book value of net operating assets to the present value of expected future residual operating incomes, which are the profits after deducting a charge for the cost of capital.

The Residual Operating Income (ROPI) Model Estimates Firm Value as the Current