Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. last year ann arbor corp had 155,000 of assets, eq

Last year Ann Arbor corp had 155,000 of assets, equal to its total invested capital,...

50.1K

Verified Solution

Question

Accounting

Last year Ann Arbor corp had 155,000 of assets, equal to its total invested capital, $305,000 of sales, $15,000 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 ROE increase because of this new computer program. (I.e. the difference of ROE)

A) 15.77%

B) 17.22%

C) 18.58%

D) 16.08%

E) 19.42%

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students