Return on Equity
Midwest Packaging's ROE last year was only 5%; 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 $774,000. The firm has no plans to use preferred stock. Management projects an EBIT of $1,818,000 on sales of $18,000,000, and it expects to have a total assets turnover ratio of 3.3. Under these conditions, the tax rate will be 35%. If the changes are made, what will be the company's return on equity? Round your answer to two decimal places.