The 2017 Income Statement for the East Division of Procter

Multiple Choice

The 2017 income statement for the East Division of Procter Wells Company is as follows: $\begin{array}{lr}\text { Sales } & \$ 1,800,000 \\\text { Operating expenses } & 1,380,000 \\ \text { Net operating income } & 420,000 \\\text { Interest expense } & 120,000 \\\text { Earnings before taxes } & 300,000 \\\text { Income tax expense }(40 \%) & 120,000 \\\text { Net income } & \$ 180,000 \\\hline\end{array}$ 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%