New Doors Corp. has $375,000 of total assets, and it uses $187,500 of total shareholder's equity capital. Its sales for the last year were $520,000, 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 (ROE) up to 15.0%. What profit margin (PM) would the firm need in order to achieve the 15% ROE, holding everything else constant? a. 5.41% b. 8.11% c. 9.41% d. 10.71% e. 12.66%
New Doors Corp. has $375,000 of total assets, and it uses $187,500 of total shareholder's equity capital. Its sales for the last year were $520,000, 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 (ROE) up to 15.0%. What profit margin (PM) would the firm need in order to achieve the 15% ROE, holding everything else constant? a. 5.41% b. 8.11% c. 9.41% d. 10.71% e. 12.66%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:New Doors Corp. has $375,000 of total assets, and it uses $187,500 of
total shareholder's equity capital. Its sales for the last year were
$520,000, 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 (ROE) up to 15.0%. What profit margin (PM) would
the firm need in order to achieve the 15% ROE, holding everything else
constant?
a. 5.41% b. 8.11% c. 9.41% d. 10.71% e. 12.66%
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