Question

There are 18 questions, a combination of true/false, multiple choice, and fill in the blank. The fill in the that ask for text answers, those answers are not case sensitive. However, for those questions that req answer, please follow the instructions explicitly to get full credit for the answer You may use any of the materials from this course, the readings provided, or the HBS case materials. Y outside search engines or any websites derived therefrom. It is also expected that you will work on this assignment by yourself. This assignment is worth 100 points and is due before class on January 30th. D Question 16 Economic Profht is calculated by taking the spread between and , and multiplying the result by 1 Previous Quiz saved at 8:22pm Sul

Answer 1

Economic profit = NOPAT – [WACC x Invested Capital]

therefore

Economic profit = [ROIC x Invested Capital] – [WACC x Invested Capital] = [ROIC – WACC] x Invested Capital

Economic Profit is calculated by taking the spread between Return on Invested Capital and WACC, and multiplying the result by Invested Capital.