Question
25. Given the summarized financial information below, calculate the Net Operating Profit After Taxes (NOPAT) for the Clean as a Whistle Corporation (they manufacture toilet
25. Given the summarized financial information below, calculate the Net Operating Profit After Taxes (NOPAT) for the Clean as a Whistle Corporation (they manufacture toilet paper). Assume a corporate income tax rate of 30% (24% federal and 6% state tax). Also assume that the beta for the common stock of this company is 1.40, the risk-free rate of return is 1.5% per year, and the expected market risk premium is 5%. The current stock price is $180 per share, and there are 10 Million shares outstanding. The average yield to maturity of the company debt is 6%, and the outstanding debt is priced at 100% of par (i.e., the book value of debt is equal to the market value of debt). (4 points)
| $ Million |
Sales | 1000 |
Cost of Sales | 690 |
Depreciation | 100 |
Operating Income (EBIT) | 210 |
Interest | 10 |
Earnings Before Tax (EBT) | 200 |
Taxes @ 30% | 60 |
Net Income | 140 |
|
|
Accounts Receivable | 200 |
Inventory | 400 |
Net Assets | 600 |
Total Assets | 1200 |
|
|
Accounts Payable | 200 |
Current Portion of Long-Term Debt | 50 |
Long-Term Debt (LTD) | 400 |
Total Equity | 550 |
Total Liabilities and Owners Equity | 1200 |
26. Given the same summarized financial information and assumptions as in the previous question, calculate the Invested Capital (IC) for the Clean as a Whistle Corporation. (4 points)
27. Given the same summarized financial information and assumptions as in the previous question, calculate the Return on Invested Capital (ROIC) for the Clean as a Whistle Corporation.
(4 points)
28. Given the same summarized financial information and assumptions as in the previous question, calculate the Weighted Average Cost of Capital (WACC) for the Clean as a Whistle Corporation. (4 points)
29. Given the same summarized financial information and assumptions as in the previous question, calculate the Economic Value Added (EVA) for the Clean as a Whistle Corporation. (4 points)
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