Pegasus Recycling has a subsidiary that recycles yard waste and another that recycles paper.Information related to the two subsidiaries follows. $\begin{array}{lrr}&\text { Yard Recycling}&\text { Paper Recycling }\
\text { Total assets } & \$ 8,000,000 & \$ 15,000,000 \
\text { Noninterest-bearing current liabilities } & 500,000 & 1,000,000 \
\text { Net income } & 1,500,000 & 2,600,000 \
\text { Interest expense } & 600,000 & 800,000 \
\text { Required rate of return } & 8 \% & 11 \% \
\text { Cost of capital } & 7 \% & 9 \% \
\text { Tax rate } & 30 \% & 32 \%
\end{array}$ How much is the return on investment for the Paper Recycling Division?
A)19.65%
B)20.40%
C)22.46%
D)14.69%

Question

Quizplus · Accepted Answer

The Answer of Pegasus Recycling has a subsidiary that recycles yard waste and another that recycles paper.Information related to the two subsidiaries follows. $\begin{array}{lrr}&\text { Yard Recycling}&\text { Paper Recycling }\
\text { Total assets } & \$ 8,000,000 & \$ 15,000,000 \
\text { Noninterest-bearing current liabilities } & 500,000 & 1,000,000 \
\text { Net income } & 1,500,000 & 2,600,000 \
\text { Interest expense } & 600,000 & 800,000 \
\text { Required rate of return } & 8 \% & 11 \% \
\text { Cost of capital } & 7 \% & 9 \% \
\text { Tax rate } & 30 \% & 32 \%
\end{array}$ How much is the return on investment for the Paper Recycling Division?
A)19.65%
B)20.40%
C)22.46%
D)14.69%

Pegasus Recycling Has a Subsidiary That Recycles Yard Waste and Another