Chang Corp

question 20

Multiple Choice

Chang Corp.has $375,000 of assets,and it uses only common equity capital (zero debt) .Its sales for the last year were $595,000,and its net income was $25,000.Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15.0%.What profit margin would the firm need in order to achieve the 15% ROE,holding everything else constant?

• A)9.45%
• B)9.93%
• C)10.42%
• D)10.94%
• E)11.49%

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Definitions:

Credibility

The quality of being trusted and believed in.

Consistency

Consistency refers to the quality of achieving a level of performance or behavior that does not vary greatly in quality over time.

Persuader

An individual or entity that uses communication and argumentation techniques to influence others' beliefs, attitudes, or actions.

Cognitive Dissonance

A psychological phenomenon where there is discomfort or mental conflict due to holding contradictory beliefs or attitudes, leading to an internal push for resolution.