5. Assume the company (IS&BS last page) will maintain its current level of Invested Capital The CEO wants to reduce debt and increase equity financing, so he directs the CFO to issue $100,000 of stock and decrease long term debt by the same amount. Calculate the difference between the ROIC and ROE after this operation a) 0.353% b) 0.165% c) 0.484% d) 3.65% Pro Forma 2020 2019 CASH AND MARKETARLE SECURITIES ACCOUNTS RECEIVABLE INVENTORIES CURRENT ASSETS GROSS PLANT AND EQUIPMENT LESS: ACCUMULATED DEPRECIATION 29,560 25,000 115,200 100.000 135.000 125.000 279,760 250.000 400.000 350,000 130,000 100,000 270.000 250.000 549,760 500,000 NET FIXED ASSETS TOTAL ASSETS LIABILITIES AND EQUITY ACCOUNTS PAYABLE ACCRURALS NOTES PAYABLE CURRENT LAIBILITIES LONG TERM DEBT TOTAL LIABILITIES COMMON STOCK ($1.00 par) RETAINED EARNINGS TOTAL OWNER'S EQUITY 89,700 78,000 34,000 30,000 36.800 34.000 160,500 142,000 155.000 140.000 315,500 282,000 150,000 150,000 84.260 68.000 234,260 218,000 TOTAL LIABILITIES AND EQUITY 549,760 500,000 INCOME STATEMENT 2020 2019 NET REVENUES & SALES (100,000 UNITS) COST OF GOODS SOLD GROSS PROFIT FIXED OPERATING EXPENSES (pre depreciation) DEPRECIATION EXPENSE OPERATING INCOME (EBIT) INTEREST INCOME BEFORE TAXES (EBT) INCOME TAXES (40%) NET INCOME Retained Earnings Dividends NUMBER OF SHARES OUTSTANDING Dividends per share 805,000 700,000 517,500 450,000 287,500 250,000 173.650 151,000 30,000 25.000 83,850 74,000 16.100 14.000 67,750 60,000 27.100 24,000 40,650 36,000 16,260 14,400 24,390 21,600 50,000 50,000 50,000 0.6896 0.57