Last year Ann Arbor Corp had $300,000 of assets, $305,000 of sales, $20,000 of...

E

Eddie O

New member
...net income, and a debt-to-total? Last year Ann Arbor Corp had $300,000 of assets, $305,000 of sales, $20,000 of net income, and a debt-to-total-assets ratio of 37.5%. The new CFO believes a new computer program will enable it to reduce costs and thus raise net income to $33,000. Assets, sales, and the debt ratio would not be affected. By how much would the cost reduction improve the ROE?

5.34%
5.82%
6.59%
8.67%
6.93%
 
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