Last year Urbana Corp. had $182,500 of assets, $307,500 of sales, $19,575 of net income, and a debt-to-total-assets ratio of 37.5%. The new CFO believes a new computer program will enable it to reduce costs and thus raise net income to $33,000. Assets, sales, and the debt ratio would not be affected. By how much would the cost reduction improve the ROE?

Select the correct answer.

a. 12.79%

b. 11.26%

c. 11.77%

d. 12.28%

e. 10.75%