Last Year Rennie Industries Had Sales of $305,000, Assets of $175,000

Multiple Choice

Last year Rennie Industries had sales of $305,000, assets of $175,000, 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. Had it reduced its assets by this amount, and had the debt/assets ratio, sales, and costs remained constant, how much would the ROE have changed?

A) 4.10%
B) 4.56%
C) 5.01%
D) 5.52%
E) 6.07%