Question
What is the IRR decision rule when comparing a project to its required return?
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Answer
Accept if IRR exceeds the required return.
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Question
What does it imply when ROIC<WACC?
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Answer
The firm is destroying value on invested capital.
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Question
What does it imply when ROIC>WACC?
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Answer
The firm is creating value on invested capital.
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Question
How is NOPAT calculated for ROIC?
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Answer
NOPAT=EBIT×(1−Tax Rate).
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