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 $12000000 $72000000 Noninterest-bearing current liabilities 3000000 12000000 Net income 1700000 6000000 Interest expense 1250000 2300000 Required rate of return 8% 10% Tax rate 35% 40%
Based on the limited information which subsidiary is the best candidate for expansion? Answer Hazardous waste because it has a higher residual income. Hazardous waste because it has a higher return on investment Residential waste because it has a higher residual income. Residential waste because it has a higher return on investment