8. Evaluating free cash flows and return on invested capital You're an industry analyst for the telecomm sector, and have been analyzing financial reports from two companies: Talker Corp. and MobileTalk Inc. The corporate tax rate for both firms is 35%. Your associate analyst has calculated and compiled, in the following table, a list of important figures you'll probably need for the analysis: Data Collected Talker Corp. EBIT $270,300 Depreciation $94,605 Total operating capital $1,144,800 Net investment in operating capital $477,000 WACC 12.28% MobileTalk Inc. $111,300 $38,955 $475,410 $206,700 17.35% In your analysis, you want to look for several characteristics-one of them being the return on invested capital (ROIC). Using the information available, complete the following statements: The net operating profit after tax (NOPAT) for Talker Corp. is whereas the NOPAT for Mobile Talk Inc. is Talker Corp. has a free cash flow of wherea Mobile Talk Inc. has a free cash flow of Talker Corp, has a return on invested capital than Mobile Talk Inc. has. Your inference from the analysis is that both firms are in a high-growth phase, and their growth will be profitable. Considering your analysis, which of the following statements is true? If ROIC is greater than the rate of return that investors require, which is the weighted average cost of capital (WACC), then the firm is adding value. IF ROIC is less than the rate of return that investors require, which is the weighted average cost of capital (WACC), then the firm is adding value