The 2014 Income Statement for the East Division of Procter

question 161

Multiple Choice

The 2014 income statement for the East Division of Procter Wells Company is as follows: $$\begin{array} { l r } \text { Sales } & \$ 1,800,000 \\\text { Operating expenses } & 1,380,000 \\\text { Net operating income } & 420,000 \\\text { Interest expense } & 120,000 \\\text { Earnings before taxes } & 300,000 \\\text { Income tax expense } ( 40 \% ) & 120,000 \\\text { Net income } & \$ 180,000 \\\hline\end{array}$$ This division's invested capital is $4,000,000. How much is the East Division's return on investment?

• A) 6.3%
• B) 5.7%
• C) 10.5%
• D) 7.5%

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