The firm's ____________ is used to calculate NOPAT because the profits from a project are assumed to be incremental to the firm.

Question

Quizplus · Accepted Answer

The firm's marginal tax rate is used to calculate NOPAT because it represents the tax rate applied to the last dollar of taxable income earned. This is the most accurate representation of the tax impact on the incremental profits from a project. Average tax rate and lowest marginal tax rate may not accurately reflect the tax impact on incremental profits.

The Firm's ____________ Is Used to Calculate NOPAT Because the Profits