What will be the companys return on equity

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Reference no: EM13257746

Midwest Packaging's ROE last year was only 6%; but its management has developed a new operating plan that calls for a debt-to-assets ratio of 40%, which will result in annual interest charges of $272,000. The firm has no plans to use preferred stock. Management projects an EBIT of $880,000 on sales of $8,000,000, and it expects to have a total assets turnover ratio of 3.2. Under these conditions, the tax rate will be 40%. If the changes are made, what will be the company's return on equity? Round your answer to two decimal places.

Reference no: EM13257746

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