I posted this once, and the answers were wrong. I understood how the person came to these answers, so I am still a little lost on this problem. I left the wrong answers in the fields below.

Problem 16-13 Current Asset Usage Policy

Payne Products had $2.4 million in sales revenues in the most recent year and expects sales growth to be 25% this year. Payne would like to determine the effect of various current assets policies on its financial performance. Payne has $1 million of fixed assets and intends to keep its debt ratio at its historical level of 50%. Payne's debt interest rate is currently 10%. You are to evaluate three different current asset policies: (1) a restricted policy in which current assets are 45% of projected sales, (2) a moderate policy with 50% of sales tied up in current assets, and (3) a relaxed policy requiring current assets of 60% of sales. Earnings before interest and taxes are expected to be 10% of sales. Payne's tax rate is 40%.

What is the expected return on equity under each current asset level? Round your answers to two decimal places.

Tight policy	4.31%
Moderate policy	3.90%
Relaxed policy	3.15%