Question

EP Enterprises has the following income statement. How much net operating profit after taxes (NOPAT) does the firm have? Sales $ 3,900.00 Costs 1,400.00 Depreciation 250.00 EBIT $ 2,250.00 Interest expense 70.00 EBT $ 2,180.00 Taxes (25%) 872.00 Net income $ 1,308.00 a. $1,685.50 b. $1,691.50 c. $1,689.50 d. $1,687.50 e. $1,683.50

Answer 1

Answer:

Option (d) is correct.

Explanation:

Given that,

Sales = $ 3,900.00

Costs = 1,400.00

Depreciation = 250.00

EBIT = $ 2,250.00

Interest expense = 70.00

EBT = $ 2,180.00

Taxes (25%) = 872.00

Net income = $ 1,308.00

Hence,

Net operating profit after taxes:

= EBIT × (1 - tax rate)

= $2,250.00 × (1 - 25%)

= $2,250.00 × 0.75

= $1,687.5

Therefore, the net operating profit after taxes (NOPAT) is $1,687.5.