Disposes of hazardous waste and subsidiary

Reference no: EM13759317

Jackie Chin Waste Management has a subsidiary that disposes of hazardous waste and a subsidiary that collects and disposes of residential garbage. Information related to the two subsidiaries follows:

	Hazardous	Residential
	Waste	Waste

Total assets	$12,000,000	$72,000,000
Noninterest-bearing current liabilities	3,000,000	12,000,000
Net income	1,700,000	6,000,000
Interest expense	1,250,000	2,300,000
Required rate of return	8%	10%
Tax rate	35%	40%

Based on the limited information, which subsidiary is the best candidate for expansion?

A. Hazardous waste, because it has a higher residual income.

B. Hazardous waste, because it has a higher return on investment

C. Residential waste, because it has a higher residual income.

D. Residential waste, because it has a higher return on investment

Reference no: EM13759317

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