Question

EP Enterprises has the following income statement. How much net operating profit after taxes (NOPAT) does the firm have?
Sales $ 2,000.00
Costs 1,400.00
Depreciation 250.00
EBIT $ 350.00
Interest expense 70.00
EBT $ 280.00
Taxes (25%) 112.00
Net income $ 168.00
Options:
a. $260.50 b. $258.50 c. $262.50 d. $256.50 e. $254.50

Answer 1

Answer:

Option (c) is correct.

Explanation:

Given that,

Sales = $ 2,000.00

Costs = 1,400.00

Depreciation = 250.00

EBIT = $ 350.00

Interest expense = 70.00

EBT = $280.00

Taxes (25%) = 112.00

Net income = $168.00

Net operating profit after taxes (NOPAT):

= EBIT × (1 - tax rate)

= $350 × (1 - 25%)

= $350 × 0.75

= $262.50

Therefore, the net operating profit after taxes (NOPAT) is $262.5.