Question

Cobalt Industries had sales of 153,900 units at a price of $9.82 per unit. It faced...

Cobalt Industries had sales of 153,900 units at a price of $9.82 per unit. It faced fixed operating costs of $259,000 and variable operating costs of $5.18 per unit. The company is subject to a tax rate of 38% and has a weighted average cost of capital of 8.9%. Calculate​ Cobalt's net operating profits after taxes​ (NOPAT​), and use it to estimate the value of the firm.​ (Assume the​ firm's earnings are not​ growing.) ​

Cobalt's NOPAT is $ ​______. ​(Round to the nearest​ dollar.)

The value fo the firm is $________. (Round to the nearest​ dollar.)

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Answer #2
a) Calculation of NOPAT:
Particulars Galaxy
Sales (153900*9.82) 1511298
Less: variable cost (153900*5.18) 797202
Contribution 714096
Less: Fixed cost 259000
Net operating profit before tax 455096
Less : Tax@38% 172936.48
NOPAT 282159.52
NOPAT is $282160
b) Calculation of value of firm:
Value of firm= NOPAT/WACC
                           = 282159.52/0.089=3170331.68
Value of firm is $3170332
answered by: anonymous
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