Last year, a firm had sales of $200,000. Its cost of goods sold was $75,000; administrative expenses were $25,000; marketing expenses were $25,000; depreciation expense was $10,000; and interest expense was $15,000. If the tax rate is 30%, what was the firm's NOPAT last year?]
A)$19,500
B)$35,000
C)$45,500
D)$52,500

Question

Quizplus · Accepted Answer

NOPAT (Net Operating Profit After Tax) = EBIT (Earnings Before Interest and Taxes) x (1 - tax rate)

We need to calculate EBIT first:

EBIT = Sales - Cost of Goods Sold - Administrative Expenses - Marketing Expenses - Depreciation Expense

EBIT = $200,000 - $75,000 - $25,000 - $25,000 - $10,000 = $65,000

Now we can calculate NOPAT:

NOPAT= EBIT x (1 - tax rate)

NOPAT = $65,000 x (1 - 0.30) = $45,500

Therefore, the answer is C ($45,500).

Last Year, a Firm Had Sales of $200,000