You're an industry analyst for the telecomm sector, and have been analyzing financial reports from two companies: CellT Corp. and Talk2Me 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 CellT Corp. EBIT $107,500 Depreciation $43,000 Total operating capital $632,100 Net investment in operating capital $301,000 WACC 8.84% Talk2Me Inc. $76,540 $30,616 $493,210 $159,100 11.50% 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 CellT Corp. is , whereas the NOPAT for Talk2Me Inc. is . CellT Corp. has a free cash flow of , whereas, Talk2Me Inc. has a free cash flow of . CellT Corp. has a return on invested capital than Talk2Me 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. The net operating profit after tax (NOPAT) for CellT Corp. is es, whereas the NOPAT for Talk2Me Inc. is . CellT Corp. has a free cash flow of , where Inc. has a free cash flow of $92,235 . CellT Corp. has a return on invested capital tha Inc. has. $69,875 Your inference from the analysis is that both firms are in a hig at both rims are in a hig . 4 75 pase, and their growth will be profitable. Considering your anal the following statements is true? $37,625 IF ROIC is greater than the rate of return that investors require, which is the weighted average cost of capital (WACC), then th adding value. The net operating profit after tax (NOPAT) for CellT Corp. is , whereas the NOPAT for Talk2Me Inc. is CellT Corp. has a free cash flow of , whereas, Talk2Me Inc. has a free cash flow of $88,741 CellT Corp. has a return on invested capital than Talk2Me Inc. has. $49,751 Your inference from the analysis is that both firms are in a high-growth phase, and their growth will be profitable. Cor $69.875 ur analys the following statements is true? $26,789 IF ROIC is greater than the rate of return that investors require, which is the weighted average cost of capitar(WACCT, then the adding value. The net operating profit after tax (NOPAT) for CellT Corp. is , whereas the NOPAT for Talk2Me Inc. is CellT Corp. has a free cash flow of , whereas, Talk2Me Inc. has a free cash flow of . CellT Corp. has a retur capital than Talk2Me Inc. has. -$109,349 Your inference from the analysis is th-$231,125 are in a high-growth phase, and their growth will be profitable. Considering your ana the following statements is true? -$188,125 IF ROIC is greater than the -$229,625 n that investors require, which is the weighted average cost of capital (WACC), then t adding value. The net operating profit after tax (NOPAT) for CellT Corp. is , whereas the NOPAT for Talk2Me Inc. is CellT Corp. has a free cash flow of , whereas, Talk2Me Inc. has a free cash flow of CellT Corp. has a return on invested capital than Talk2Me Inc. has. -$109,349 Your inference from the analysis is that both firms are in a high-growth phase, and their growth will b -$66,349 Considering your analysis the following statements is true? - $231,125 IF ROIC is greater than the rate of return that investors require, which is the weighted aver -589,225 pital (WACC), then the adding value. . The net operating profit after tax (NOPAT) for CellT Corp. is , whereas the NOPAT for Talk2Me Inc. is . CellT Corp. has a free cash flow of , whereas, Talk2Me Inc. has a free cash flow of . CellT Corp. has a return on invested capital than Talk2Me Inc. has. och flow of Your inference from Isis is that both firms are in a high-growth phase, and their growth will be profitable. Considering your anah the following staten higher ue? m i ch ethn ninhtadura cortofenital (WACC) then the 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
