Last Year Rennie Industries Had Sales of $270,000,assets of $175,000

question 42

Multiple Choice

Last year Rennie Industries had sales of $270,000,assets of $175,000 (which equals total invested capital) ,a profit margin of 5.3%,and an equity multiplier of 1.2.The CFO believes that the company could reduce its assets by $51,000 without affecting either sales or costs.The firm finances using only debt and common equity.Had it reduced its assets by this amount,and had the debt/total invested capital ratio,sales,and costs remained constant,how much would the ROE have changed? Do not round your intermediate calculations.

• A) 4.08%
• B) 3.03%
• C) 4.52%
• D) 3.07%
• E) 4.04%

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