Question

Question 4
Fragile Express Delivery Company’s earnings before interest and taxes (EBIT) was
$
725
$725 million.

Assuming Fragile Express Delivery’s tax rate is
37
%
37%, what is their net operating profit after taxes (NOPAT) for 2019 expressed in millions of dollars?


993.25
993.25



1
,
150.79
1,150.79



725.63
725.63



456.75
456.75

Answer 1

To calculate the Net Operating Profit After Taxes (NOPAT), you can use the following formula:

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

In this case, you have:

- EBIT = $725 million
- Tax Rate = 37% = 0.37

Now, plug these values into the formula:

\[
\text{NOPAT} = 725 \times (1 - 0.37)
\]
\[
\text{NOPAT} = 725 \times (0.63)
\]
\[
\text{NOPAT} = 456.75 \text{ million}
\]

So, Fragile Express Delivery Company’s net operating profit after taxes (NOPAT) for 2019 is **$456.75 million**.

The correct answer is **456.75**.