What profit margin would LeCompte need in order to achieve the 15% ROE, holding everything else constant?

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LeCompte Corp. has $312,900 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $560,000, and its net income after taxes was $24,655. Stockholders recently voted in a new management team that has promised to lower costs and gets the return on equity up to 15%. What profit margin would LeCompte need in order to achieve the 15% ROE, holding everything else constant?

Select the correct answer.

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a. 7.66%
b. 9.82%
c. 6.94%
d. 9.10%
e. 8.38%

 

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