Return on Equity
Midwest Packaging's ROE last year was only 3%; but its management has developed a new operating plan that calls for a debt-to-assets ratio of 60%, which will result in annual interest charges of $315,000. The firm has no plans to use preferred stock. Management projects an EBIT of $657,000 on sales of $9,000,000, and it expects to have a total assets turnover ratio of 2.4. Under these conditions, the tax rate will be 30%. If the changes are made, what will be the company's return on equity? Round your answer to two decimal places.