Pegasus Recycling has a subsidiary that recycles yard waste and another that recycles paper. Information related to the two subsidiaries follows.

Yard RecyclingPaper Recycling

Totalassets$8,000,000$15,000,000

Noninterest-bearing current liabilities500,0001,000,000

Netincome1,500,0002,600,000

Interestexpense600,000800,000

Required rate ofreturn8%11%

Cost ofcapital7%9%

Taxrate30%32%

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