Last year Piper Corp. had sales of $303,225,000, operating costs of $267,500,000, and year-end assets of $195,000,000. The debt-to- total-assets ratio was 27%, the interest rate on the debt was 8.2%, and the firm's corporate tax rate was 37%. The new CFO wants to see how the ROE would have been affected if the firm had used a 45% debt ratio. Assume that sales and total assets would not be affected, and that the interest rate and tax rate would both remain constant. What would the ROE be under the current and under the proposed capital structures? Current ROE ____________ ROE with Proposed Capital Structure

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