Profit margin and ROE

10. Hindelang Housewares Company (HHC) has $2,000,000 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $1,600,000, and its net income was $160,000. Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15%. What profit margin would HHC need in order to achieve the 15% ROE? Assume that the new actions will have no effect on total assets and sales, and it will not change the company's determination to use 100% equity to finance its operations.

a. 15.00%

b. 18.75%

c. 20.00%

d. 22.50%

e. 25.45%