Exhibit $16\mathrm{.}1$

Zorn Corporation is deciding whether to pursue a restricted or relaxed working capital investment policy. The firm's annual sales are expected to total $$4,400,000,$ its fixed assets turnover ratio equals $4\mathrm{.}0,$ and its debt and common equity are each $50\%$ of total assets. EBIT is $$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 assets turnover will be $2\mathrm{.}2.$

Refer to Exhibit $16\mathrm{.}1.$ What's the difference in the projected ROEs under the restricted and relaxed policies? Do not round intermediate calculations.

a$.1\mathrm{.}52\%$

b$.1\mathrm{.}23\%$

c$.1\mathrm{.}26\%$

d$.1\mathrm{.}25\%$

e$.0\mathrm{.}97\%$