Reading 33 Q5 NOPAT/Assets?

CFA Level II Equities
#1

[question removed by moderator]

My Q : If RI= (ROE-r) x BV my calculation is as follows:

E=A-L => 100-50=50m

i exp = 9%x50m=4.5m

NI=NOPATx(1-t) - i =(10m x .6)-4.5m=6m-4.5m=1.5m

ROE=1.5m/50m=3%

RI=(.03-.12)x50m=-4.5m

What am I doing wrong and what is NOPAT/Assets?! :frowning_face:

#2

RI=NOPAT-$WACC

NOPAT=10 which is given. total capital is 100$—> $WACC is 8.7. therefore, RI=1.3

If i go with the way you calculate, EBIT= 16.67 ((NOPAT/ (1-T))

int=4.5 (0.09*50). thus, NI=7.3

RI=NI-(k*Equity) = 7.3- (0.12*50) = 1.3