Question: Some years ago, Ashby Group was started with an initial invested capital of $2 million and had been growing over the past few years.Ashby operates

Some years ago, Ashby Group was started with an initial invested capital of $2 million and had been growing over the past few years.Ashby operates in a world with a tax rate of 30% and has positive net investment for the most recent year (year t).Assume the firm makes all its investments at the end of the year and computes ROIC relative to the prior year's invested capital.Inyear t, Ashby has a positive ROIC and expects (correctly) that its RONIC will be equal to its ROIC.Inyear t, Ashby experienced negative free cash flow.

A. Which of the following statements best describes the firm'sNOPAT inyear t?

Group of answer choices (Highlight correct answers)

NOPAT in year t is positive

NOPAT in year t is negative

NOPAT in year t is zero

Not enough information to determine NOPAT in year t

B. Which of the following statements best describes the firm'sINVESTMENT RATE inyear t?

Group of answer choices

INVESTMENT RATE in year t is 0

INVESTMENT RATE in year t is 1

INVESTMENT RATE in year t is greater than 1

INVESTMENT RATE in year t is negative

INVESTMENT RATE in year t is between 0 and 1

Not enough information to determine the firm's INVESTMENT RATE in year t

C. Which of the following statements best describes the firm'sINVESTED CAPITAL at the END ofyear t?

Group of answer choices

INVESTED CAPITAL in year t is EQUAL TO invested capital in year t-1

INVESTED CAPITAL in year t is HIGHER than invested capital in year t-1

INVESTED CAPITAL in year t is LOWER than invested capital in year t-1

Not enough information to determine how INVESTED CAPITAL in year t relates to invested capital in year t-1

D. Which of the following statements best describes the firm'sROIC in yeart+1?

Group of answer choices

ROIC in year t+1 will be EQUAL to ROIC in year t

ROIC in year t+1 will be HIGHER than ROIC in year t

ROIC in year t+1 will be LOWER than ROIC in year t

Not enough information to determine how ROIC in year t+1 relates to ROIC in year t

E. Which of the following statements best describes the firm'sGROWTH RATE fromyear t to year t+1?

Group of answer choices

The growth rate from year t to year t+1 is NEGATIVE

The growth rate from year t to year t+1 is POSITIVE

The growth rate from year t to year t+1 is ZERO

Not enough information to determine the growth rate from year t to year t+1

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