Step 1: Calculate Net Operating Profit After Taxes (NOPAT)

Net Sales 2,600.00

Cost of Goods Sold -1,400.00

SG&A Expenses -400.00

Depreciation -150.00

Other Operating Expenses -100.00

Operating income 550.00

Tax (40%) -140.00

NOPAT 410.00

Note: This NOPAT calculation does not include the tax savings of debt. Companies paying high taxes and having high debts may have to consider tax savings effects, but this is perhaps easiest to do by adding the tax savings component later in the capital cost rate (CCR)

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