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Determining the new computer program

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Last year Ann Arbor Corp had $155,000 of assets, equal to its total invested capital, $305,000 of sales, $25,000 of net income, and a debt-to-total-capital ratio of 37.5%. The firm finances using only debt and common equity. The new CFO believes a new computer program will enable it to reduce costs and thus raise net income to $33,000. Assets, total invested capital, sales, and the debt to capital ratio would NOT be affected. By how much would the ROE increase because of this new computer program (i.e. the difference of ROE)?

Reference no: EM132554508

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