I submitted this question last night. Will someone take a look at it? Tell me how NOPAT and Net Income is calculated in the excel file. I don't understand where the interest comes from until after the 6 million expansion. Thanks.

a. Compute Roll's current net operating income after tax (NOPAT) and net income. Return on NOA Tax Rate Net operating assets Expansion Cost 10% 40% $ 10,000,000.00 $ 6,000,000.00 $ Tax 4,000,000.00 $ Interest 1,000,000.00 $ Net operating after Net income tax 5,000,000.00 $ 3,000,000.00 b. Determine net income and net operating income after tax for each alternative financing plan. Alternative 1 NOPAT Net Income $ 1,600,000.00 $ 1,540,000.00 Alternative 2 NOPAT Net Income $ 1,600,000.00 $ 1,384,000.00 c. Compute return on common shareholders' equity for each alternative (use ending equity). Alternative 1 Alternative 2 Return on common shareholders equity Return on common shareholders equity 11% 14% d. Explain any difference in the ROCE for the alternative plans computed in (c). Include a discussion of leverage in your response. The difference in the return on common shareholder's equity for the alternatives is notable due to the successful equity trade. Under the second alternative, return on common shareholders equity is higher, so the company should pursue alternative two. a. Determine whether leverage (from long-term debt) benefits Rose's shareholders. (Hint: Examine ROCE with and without leverage.) ROCE with leverage is 14% Tax Rate 50% Net income with leverage $ 157,500.00 Plus: Saved interest $ 54,000.00 Less: Tax Effect $ 27,000.00 $ 27,000.00 Net income without leverage. $ 184,500.00 At present level 10.25% Leverage does benefit the shareholders since it is much higher with leverage but lower without it. b. Compute Rose's NOPAT and RNOA (use ending NOA). Net operating income after tax $ 184,500.00 Return on net operating Assets 10.25% c. Demonstrate the favorable effect of leverage given the disaggregation of ROCE and your answer to part b. The favorable effect of leverage comes from using the borrowed funds for capital structure. Once again, since the ROCE is higher than RNOA , financial leverage benefits the shareholders