Problem $4\mathrm{.}14($Return on Equity$)$

Pacific Packaging's ROE last year was only $2\%,$ but its management has developed a new operating plan that calls for a debt$-$to$-$capital ratio of $55\%,$ which will result in annual interest charges of $$782,000.$ The firm has no plans to use preferred stock and total assets equal total invested capital. Management projects an EBIT of $$1,207,000$ on sales of $$17,000,000,$ and it expects to have a total assets turnover ratio of $3\mathrm{.}4.$ Under these conditions, the tax rate will be $25\%.$ If the changes are made, what will be the company's return on equity? Do not round intermediate calculations. Round your answer to two decimal places. $$

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