1) Which of the following is not an adjustment made to NOPAT on the way to obtaining net incremental cash flows for a capital budgeting project?
Add back operating income.
Account for any needed initial working capital.
Subtract the initial capital investment, or count it as a negative cash flow.
2) Operating income for Fake Company Gamma (FCG) in 2017 is projected to be $7.8 million. If the company's EBIT is the same as operating income, and if its tax rate is estimated at 28%, what is NOPAT?
about $5.6 million
$7.8 million
about $2.2 million