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Boromir Inc., a record producer and distributor, earned $100 million in NOPAT on invested capital of $800 million in Year 0. In addition, the

 

Boromir Inc., a record producer and distributor, earned $100 million in NOPAT on invested capital of $800 million in Year 0. In addition, the firm reported net capital expenditures of $25 million and an increase in noncash working capital of $15 million. a. Assuming the firm's ROIC and reinvestment rate remain unchanged, estimate the expected growth in operating income in Year 1. [1 point] b. If the firm can improve its ROIC by 2.5% in Year 1 (i.e. Year 1's ROIC = Year O's ROIC +2.5%), estimate the expected growth in NOPAT in Year 1. [1 point] %3D

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