Pendant Publishing reported the following results for its Textbook Division:

Pendant's target rate of return is 15% and the weighted average cost of capital is 10%.Its effective tax rate is 35%.
What is the Textbook Division's sales margin?
A)200.00%
B)20.00%
C)40.00%
D)45.45%

Question

Pendant Publishing reported the following results for its Textbook Division:

Pendant's target rate of return is 15% and the weighted average cost of capital is 10%.Its effective tax rate is 35%.
What is the Textbook Division's sales margin?
A)200.00% 
B)20.00% 
C)40.00% 
D)45.45%

Quizplus · Accepted Answer

B)Sales margin = Operating income / Sales
20% = 440,000 / 2,200,000

Pendant Publishing Reported the Following Results for Its Textbook Division