J Co. has debt ratioof .50 , total assets

turnoverof 0.25 , and a profit margin of 10%. The

president is unhappy with the current return on

equity , and he thinks it could be doubled . This

could be accomplished(1) by increasing the profit margin to14% and (2) by increasing debt

utilization. Total assets turnover will not change.

What new debt ratio along with the 14% profit

margin is required to double the return on equity ?

a. 0.75b.0.65c.0.70d.0.55