What is the expected net operating profit after tax (NOPAT) if the most likely estimates are used?
A) $493,500
B) $330,000
C) $300,000
D) $124,500

Question

Quizplus · Accepted Answer

The expected NOPAT is calculated as follows: 
Revenue - Operating Expenses - Depreciation = Earnings Before Interest and Taxes (EBIT) 
EBIT * (1 - Tax Rate) = NOPAT

Using the most likely estimates: 
Revenue = $1,500,000 
Operating Expenses = $900,000 
Depreciation = $300,000 
EBIT = $300,000 
Tax Rate = 40%

$300,000 * (1 - 0.4) = $180,000 
Therefore, the expected NOPAT is $180,000 or C.

What Is the Expected Net Operating Profit After Tax (NOPAT)