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 $15,256,900 $86,725,000 Noninterest-bearing current liabilities 3,302,200 13,158,600 Net income 1,900,400 6,631,500 Interest expense 1,403,300 8,046,500 Required rate of return 10% 13% Tax rate 40% 40% Calculate ROI for both subsidiaries. (Round answers to 2 decimal places, e.g. 15.32%.) Hazardous Waste Residential Waste ROI % % 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 $ $ Which subsidiary has added the most to shareholder value in the last year? has added the most to shareholder value. Based on the limited information, which subsidiary is the best candidate for expansion? is the best candidate for expansion.
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