Georgia Electric reported the following income statement and balance sheet for the previous year:

Balance Sheet:
Cash		$ 100,000
Inventories		1,000,000
Accounts receivable		500,000
Current assets		$1,600,000
					Total debt		$4,000,000
Net fixed assets		4,400,000			Total equity		2,000,000
Total assets		$6,000,000			Total claims		$6,000,000
	Income Statement:
	Sales			$3,000,000
	Operating costs			1,600,000
	Operating income (EBIT)			$1,400,000
	Interest			400,000
	Taxable income (EBT)			$1,000,000
	Taxes (40%)			400,000
	Net income			$ 600,000

The company's interest cost is 10%, so the company's interest expense each year is 10% of its total debt.While the company's financial performance is quite strong, its CFO is always looking for ways to improve. The CFO has noticed that the company's inventory turnover ratio is considerably weaker than the industry average, which is 6.0. As an exercise, the CFO asks what would the company's ROE have been last year if the following had occurred:

	The company maintained the same sales, but reduced inventories enough to achieve the industry average inventory turnover ratio.
	Cash generated from the inventory reduction was used to reduce the company's outstanding debt. So, the company's total debt would have been $4 million less the freed-up cash from the improvement in inventory policy.
	Assume equity does not change and all earnings are paid out as dividends.

Under this scenario, what would have been the company's ROE last year?

27.0%

29.5%

30.3%

31.5%

33.0%