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Altus Minerals recently reported $2,850 of sales, $1,300 of operating costs other than depreciation, and $250 of depreciation. The company also has an interest expense of $70 and a tax rate of 40%. How much after-tax operating income (NOPAT) does the firm have? Your answer should be between 670 and 885, rounded to even dollars (although decimal places are okay), with no special characters.

Altus Minerals recently reported $2,850 of sales, $1,300 of operating costs other than depreciation, and $250 of depreciation. The company also has an interest expense of $70 and a tax rate of 40%. How much after-tax operating income (NOPAT) does the firm have? Your answer should be between 670 and 885, rounded to even dollars (although decimal places are okay), with no special characters.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Altus Minerals recently reported $2,850 of sales, $1,300 of operating costs other than depreciation, and $250 of depreciation. The company also has an interest expense of $70 and a tax rate of 40%. How much after-tax operating income (NOPAT) does the firm have? Your answer should be between 670 and 885, rounded to even dollars (although decimal places are okay), with no special characters.
Transcribed Image Text:Altus Minerals recently reported $2,850 of sales, $1,300 of operating costs other than depreciation, and $250 of depreciation. The company also has an interest expense of $70 and a tax rate of 40%. How much after-tax operating income (NOPAT) does the firm have? Your answer should be between 670 and 885, rounded to even dollars (although decimal places are okay), with no special characters.
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Solution:

Net Operating Profit after Tax (NOPAT) refers to the operating profit of a business after deducting tax expense from it.

So, NOPAT = Earnings before interest and taxes x (1-Tax rate)

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