Computing, Analyzing and Interpreting Residual Operating Income (ROPI)

In its 2015 fiscal year annual report, Texas Roadhouse reports net operating income after tax (NOPAT)

of $102,495 thousand. As of the beginning of fiscal year 2015 it reports net operating assets of $596,104 thousand.

a. Did Texas Roadhouse earn positive residual operating income (ROPI) in 2015 if its weighted average cost of capital (WACC) is 7%? Explain.

b. At what level of WACC would Texas Roadhouse not report positive residual operating income for 2015? Explain.