Last year Bell Corp had $200 of assets, $300 of sales, $25 of net income, and a liability-to- asset ratio of 40%. The new CFO believes the firm has excessive fixed assets and inventory that could be sold, enabling it to reduce its total assets to $150. Sales, costs, and net income would not be affected, and the firm would maintain the 40% liability-to-asset ratio. By how much would the reduction in assets improve the ROE?

Select one:

a.8.33%

b.6.94%

c.5.56%

d.10.42%

e.16.67%