The Pasta Division of Whole Grain Corporation Had Sales of $5,500,000

Multiple Choice

The Pasta Division of Whole Grain Corporation had sales of $5,500,000 and operating income of $1,375,000 last year. The total assets of the Pasta Division were $2,750,000, while current liabilities were $340,000. Whole Grain Corporation's target rate of return is 18%, while its weighted average cost of capital is 15%. The effective tax rate for the company is 40%. What is the Pasta Division's sales margin?

A) 33.00%
B) 25.00%
C) 6) 18%
D) 50.00%