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Buchholz Corporation follows a moderate current asset investment policy, but it is now considering a change, perhaps to a restricted or maybe to a relaxed

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Buchholz Corporation follows a moderate current asset investment policy, but it is now considering a change, perhaps to a restricted or maybe to a relaxed policy. The firm's annual sales are $400,000; its fixed assets are $100.000: its target capital structure calls for 50% debt and 50% equity, its EBIT is $35.000; the interest rate on its debt is 10% and its tax rate is 40%. With a restricted policy, current assets will be 20% of sales, while under a relaxed policy they will be 30% of sales. What is the difference in the projected ROEs between the restricted and relaxed policies? 3.5.18% 6.4.24% O 0.3.73% d. 3.25%

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