Last year Central Chemicals had sales of $305,000, assets of $127,500, a profit margin of 5.3%, and an equity multiplier of 1.2. The CFO believes that the company could reduce its assets by $21,000 without affecting either sales or costs. Had it reduced its assets in this amount, and had the debt-to-assets ratio, sales, and costs remained constant, by how much would the ROE have changed?

Select the correct answer.

a. 2.28%

b. 3.00%

c. 2.64%

d. 3.36%

e. 1.92%