Question: Computing, Analyzing and Interpreting Residual Operating Income (ROPI) In its 2015 fiscal year annual report, Texas Roadhouse reports net operating income after tax (NOPAT) of

Computing, Analyzing and Interpreting Residual Operating Income (ROPI)

In its 2015 fiscal year annual report, Texas Roadhouse reports net operating income after tax (NOPAT)

of $102,495 thousand. As of the beginning of fiscal year 2015 it reports net operating assets of $596,104 thousand.

a. Did Texas Roadhouse earn positive residual operating income (ROPI) in 2015 if its weighted average cost of capital (WACC) is 7%? Explain.

b. At what level of WACC would Texas Roadhouse not report positive residual operating income for 2015? Explain.

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