Question

Question 3
Momo’s Candy Inc.’s earnings before interest and taxes (EBIT) was
$
12
$12 million.

Assuming Momo’s Candy’s tax rate is
10
%
10%, what is their net operating profit after taxes (NOPAT) for 2013 expressed in millions of dollars?


10.8
10.8



13.2
13.2



12.9
12.9



13.3
13.3

Answer 1

To calculate the net operating profit after taxes (NOPAT), we can use the following formula:

\[
\text{NOPAT} = \text{EBIT} \times (1 - \text{Tax Rate})
\]

Given that:
- EBIT = $12 million
- Tax Rate = 10% (or 0.10)

Let's calculate NOPAT:

\[
\text{NOPAT} = 12 \times (1 - 0.10) = 12 \times 0.90 = 10.8 \text{ million}
\]

Thus, Momo’s Candy Inc.’s NOPAT for 2013 is **10.8 million**.