Question
Penny Worth Waste Management has a subsidiary that disposes of hazardous waste and a subsidiary that collects and disposes of residential garbage. Information related to
Penny Worth 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 Waste | Residential Waste | |||
---|---|---|---|---|
Total assets | $15,606,000 | $88,740,000 | ||
Noninterest-bearing current liabilities | 3,366,000 | 13,464,000 | ||
Net income | 1,903,000 | 6,732,000 | ||
Interest expense | 1,397,000 | 8,184,000 | ||
Required rate of return | 10% | 13% | ||
Tax rate | 40% | 40% |
(a) Calculate ROI for both subsidiaries. (Round answers to 2 decimal places, e.g. 15.32%.)
Hazardous Waste | Residential Waste | |||
---|---|---|---|---|
ROI | 22.40 % | 15.47 % |
b) Calculate EVA for both subsidiaries. Note that since no adjustments for accounting distortions are being made, EVA is equivalent to residual income. (Enter negative answers preceding either - sign, e.g. -45 or in parentheses, e.g. (45).)
Hazardous Waste | Residential Waste | |||
---|---|---|---|---|
EVA | $Please place answer here | $Please place answer here |
Can someone please help with this and show you work please?
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