Chang Corp

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 raise the return on equity 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%