LeCompte Corp

question 11

Multiple Choice

LeCompte Corp.has $312,900 of assets, and it uses only common equity capital 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%.What profit margin would LeCompte need in order to achieve the 15% ROE, holding everything else constant?

• A)7.57%
• B)7.95%
• C)8.35%
• D)8.76%
• E)9.20%

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Definitions:

Motivation

The process that initiates, guides, and maintains goal-oriented behaviors, driven by the desire to fulfill a need or achieve an objective.

Constant Flow

A steady, unchanging rate of movement or supply of a fluid, energy, or another quantifiable phenomenon.

Mechanism

A system of parts working together in a machine or an intricate process.

Directed

Guided or managed towards a specific aim or goal.