NOPAT question correct, question

mkytz15

Which one is correct?

NOPAT = EBIT (1-T)
or
NOPAT = EBIT - Taxes ==> (EBIT - Int) (1-T) + Int

brainsX

do we take the interest tax shield out of NOPAT?

no, because it is net _operating_ profit after tax. it is not after tax cash flow, which has the interest tax shield.

economicz

NOPAT = EBIT(1-t)

kkn006

I believe first is correct with T=effective tax rate and 2nd with T=actual tax rate. Think curriculum uses effective tax rate, so I will go with 1.