Howe Company Increased Its ROI from 20% to 25

Multiple Choice

Howe Company increased its ROI from 20% to 25%. Net operating income and sales remained at their previous levels of $40,000 and $1,000,000 respectively. The increase in ROI was attributed to a reduction in operating assets brought about by the sale of obsolete inventory at cost (the proceeds from the sale were used to reduce bank loans) . By how much was inventory reduced?

A) $8,000
B) $40,000
C) $10,000
D) it is impossible to determine from the data given.