MicroDrive Inc. December 31 Balance Sheets (in millions of dollars) 2017 2018 Assets $15 $10 Cash $65 Short-term investments Accounts receivable $0 $315 $375 $415 Inventories $615 $1,000 $1,000 $2,000 $810 Total current assets Net plant and equipment (Net FA) $870 Total assets $1,680 Liabilities and equity Accounts payable Notes payable Accruals $30 $60 $130 $220 $580 $800 $40 $60 $110 $140 $310 $754 $1,064 $40 $130 Total current liabilities Long-term bonds Total liabilities Preferred stock (400,000 shares) Common stock (50,000,000 shares) Retained earnings Total common equity Total liabilities and equity $130 $766 $710 $896 $840 $2,000 $1,680 MicroDrive Income Statements for Years Ending December 31 (in millions of dollars) 2018 2017 INCOME STATEMENT Net sales $3,000.0 $2,616.2 $383.8 $100.0 $2,850.0 Operating costs except depreciation EBITDA $2,497.0 $353.0 Depreciation and amortization Earnings before interest and taxes (EBIT) Less interest $90.0 $283.8 $263.0 $88.0 $60.0 $203.0 Earnings before taxes (EBT) Taxes (t-40%) Net Income before preferred dividends Preferred dividends $195.8 $78.3 $81.2 $121.8 $117.5 $4.0 $4.0 Net Income available to common stockholders $113.5 $117.8 Common dividends $57.5 $56.0 $53.0 $64.8 Addition to retained earnings 1) Calculate MicroDive's net operating working capital (NOWC), total net operating capital (TOC), net operating profit after taxes (NOPAT), and free cash flow (FCF) for Year 2018. (16 points) 2) MicroDive's cost of capital (WACC) is 10 %. Calculate the company's 2018 ROIC. Does MicroDive's growth add value? (4 points)