Question: A Growth-Return Profile for Cisco Systems, Inc. (Medium) In November 2009, Cisco Systems; shares traded at $24 each, with a total market equity capitalization of $138.8 billion. The most recent balance sheet reported net operating assets of $13.9 billion, along with $24.7 billion in net financial assets. A financial statement analysis produced a forecast of 57 .1 percent for return on net operating assets (RNOA) for the next fiscal year.
a. Calculate the expected return from buying the enterprise at the current market price if no growth is expected after the forward year.
b. Calculate the expected return from buying the enterprise if you expect a growth rate equal to the GDP growth rate of 4 percent after the forward year.
c. Develop a full growth-return profile for Cisco, like that in Figure.
d. How does this profile help you in your investment decision?
