A company is considering whether to pursue a restricted or relaxed current asset investment policy. The firm's annual sales are expected to total $$3,600,000,$ its fixed assets turnover ratio equals $4\mathrm{.}0,$ and its debt and common equity are each $50\%$ of total assets. EBIT is $$150,000,$ the interest rate on the firm's debt is $10\%,$ and the tax rate is $40\%.$ If the company follows a restricted policy, its total assets turnover will be $2\mathrm{.}5.$ Under a relaxed policy its total as ets turnover will be $2\mathrm{.}2.$

What's the difference in the projected ROEs under the restricted and relaxed policies?

$$ a$.1\mathrm{.}50\%$

$$ b$.1\mathrm{.}20\%$

$.1\mathrm{.}80\%$

$$ d$.2\mathrm{.}59\%$ A company is considering whether to pursue a restricted or relaxed current asset investment policy. The firm's annual sales are expected to total $$3,600,000,$ its fixed assets turnover ratio

equals $4\mathrm{.}0,$ and its debt and common equity are each $50\%$ of total assets. EBIT is $$150,000,$ the interest rate on the firm's debt is $10\%,$ and the tax rate is $40\%.$ If the company follows a

restricted policy, its total assets turnover will be $2\mathrm{.}5.$ Under a relaxed policy its total as sts turnover will be $2\mathrm{.}2.$

What's the difference in the projected ROEs under the restricted and relaxed policies?

a$.1\mathrm{.}50\%$

b$.1\mathrm{.}20\%$

c$.1\mathrm{.}80\%$

d$.2\mathrm{.}59\%$

e$.2\mathrm{.}16\%$