Solved by verified expert :(2.7) Net operating profit after
taxes (NOPAT) C K
[i].
Bae Inc. has the following income
statement. How much net operating
profit after taxes (NOPAT) does the firm have?
Sales
$2,000.00
Costs
1,200.00
Depreciation
100.00
EBIT
$ 700.00
Interest expense
200.00
EBT
$ 500.00
Taxes (35%)
175.00
Net income
$ 325.00
a.
$370.60
b.
$390.11
c.
$410.64
d.
$432.25
e.
$455.00
(2.7) Net operating profit after
taxes (NOPAT) C K
[ii].
EP Enterprises has the following
income statement. How much net
operating profit after taxes (NOPAT) does the firm have?
Sales
$1,800.00
Costs
1,400.00
Depreciation
250.00
EBIT
$ 150.00
Interest expense
70.00
EBT
$ 80.00
Taxes (40%)
32.00
Net income
$ 48.00
a.
$81.23
b.
$85.50
c.
$90.00
d.
$94.50
e.
$99.23
(2.7) Return on invested capital
(ROIC)
[iii].
Tibbs Inc. had the following data
for the year ending 12/31/07: Net
income = $300; Net operating profit after taxes (NOPAT) = $400; Total assets
= $2,500; Short-term investments = $200; Stockholders’ equity = $1,800; Total
debt = $700; and Total operating capital = $2,300. What was its return on invested capital
(ROIC)?
a.
14.91%
b.
15.70%
c.
16.52%
d.
17.39%
e.
18.26%
(2.7) Total operating capital
[iv].
Zumbahlen Inc. has the following
balance sheet. How much total
operating capital does the firm have?
Cash
$ 20.00
Accounts payable
$ 30.00
Short-term investments
50.00
Accruals
50.00
Accounts receivable
20.00
Notes payable
30.00
Inventory
60.00
Current liabilities
$110.00
Current assets
$150.00
Long-term debt
70.00
Gross fixed assets
$140.00
Common stock
30.00
Accumulated deprec.
40.00
Retained earnings
40.00
Net fixed assets
$100.00
Total common equity
$ 70.00
Total assets
$250.00
Total liab. & equity
$250.00
a.
$114.00
b.
$120.00
c.
$126.00
d.
$132.30
e.
$138.92
(2.8) Economic Value Added (EVA)
[v].
Barnes’ Brothers has the following
data for the year ending 12/31/10: Net
income = $600; Net operating profit after taxes (NOPAT) = $700; Total assets
= $2,500; Short-term investments = $200; Stockholders’ equity = $1,800; Total
debt = $700; and Total operating capital = $2,100. Barnes’ weighted average cost of capital is
10%. What is its economic value
added (EVA)?
a.
$399.11
b.
$420.11
c.
$442.23
d.
$465.50
e.
$490.00
(Comp: 2.3,2.5) Income statement:
net cash flow
[vi].
Edwards Electronics recently
reported $11,250 of sales, $5,500 of operating costs other than depreciation,
and $1,250 of depreciation. The
company had no amortization charges, it had $3,500 of bonds that carry a
6.25% interest rate, and its federal-plus-state income tax rate was 35%. How much was its net cash flow?
a.
$3,284.75
b.
$3,457.63
c.
$3,639.61
d.
$3,831.17
e.
$4,032.81
(Comp: 2.3,2.7) Income
statement:free cash flow
[vii].
Wells Water Systems recently
reported $8,250 of sales, $4,500 of operating costs other than depreciation,
and $950 of depreciation. The company
had no amortization charges, it had $3,250 of outstanding bonds that carry a
6.75% interest rate, and its federal-plus-state income tax rate was 35%. In order to sustain its operations and thus
generate sales and cash flows in the future, the firm was required to spend
$750 to buy new fixed assets and to invest $250 in net operating working
capital. How much free cash flow did
Wells generate?
a.
$1,770.00
b.
$1,858.50
c.
$1,951.43
d.
$2,049.00
e.
$2,151.45
Hard:
(2.8) EVA
[viii].
HHH Inc. reported $12,500 of sales
and $7,025 of operating costs (including depreciation). The company had $18,750 of
investor-supplied operating assets (or capital), the weighted average cost of
that capital (the WACC) was 9.5%, and the federal-plus-state income tax rate
was 40%. What was HHH’s Economic Value
Added (EVA), i.e., how much value did management add to stockholders’ wealth
during the year?
a.
$1,357.13
b.
$1,428.56
c.
$1,503.75
d.
$1,578.94
e.
$1,657.88
(Comp: 2.3,2.7) Changes in net
income and NCF
[ix].
Last year, Michelson Manufacturing
reported $10,250 of sales, $3,500 of operating costs other than depreciation,
and $1,250 of depreciation. The
company had no amortization charges, it had $3,500 of bonds outstanding that
carry a 6.5% interest rate, and its federal-plus-state income tax rate was
35%. This year’s data are expected to
remain unchanged except for one item, depreciation, which is expected
to increase by $725. By how much will
the depreciation change cause the firm’s net after-tax income and its net
cash flow to change? Note that the
company uses the same depreciation calculations for tax and stockholder
reporting purposes.
a.
-$383.84; $206.68
b.
-$404.04; $217.56
c.
-$425.30; $229.01
d.
-$447.69; $241.06
e.
-$471.25; $253.75
[x].
(Comp: 2.3,2.7) Income stmt: FCF
vs. net income
Bartling Energy Systems recently
reported $9,250 of sales, $5,750 of operating costs other than depreciation,
and $700 of depreciation. The company
had no amortization charges, it had $3,200 of outstanding bonds that carry a
5% interest rate, and its federal-plus-state income tax rate was 35%. In order to sustain its operations and thus
generate sales and cash flows in the future, the firm was required to make
$1,250 of capital expenditures on new fixed assets and to invest $300 in net
operating working capital. By how much
did the firm’s net income exceed its free cash flow?
a.
$673.27
b.
$708.70
c.
$746.00
d.
$783.30
e.
$822.47
