Problem:
LeCompte Corp. has $312,900 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $620,000, and its net income after taxes was $24,655. Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15%.
Required:
Question: What profit margin would LeCompte need in order to achieve the 15% ROE, holding everything else constant?
Note: Show supporting computations in good form.