Target ROE problem

You are given the following information regarding KTC for 2019:

RETURN ON ASSETS = 7.5% NET PROFIT MARGIN = 6.0% DEBT EQUITY RATIO = 1.5x SALES = $550,000.00 GROSS PROFIT RATE = 50.0% TAX RATE = 34.0%

1) What must KTC project as its 2020's sales in order to generate an additional 5% Return on Equity above last years levels (2019s ROE + 5%, not 2019s ROE x 105%)

2) Prepare a projected 2020 Profit and Loss Statement and Balance Sheet (general categories are fine).

3) Calculate: 2020s

projected RETURN ON EQUITY (use the DuPont model)

2020s projected RETURN ON ASSETS

2020s projected NET PROFIT MARGIN

2020s projected EQUITY MULTIPLIER

2020s projected TOTAL ASSET TURNOVER

4) In addition to the above, determine the increase in sales necessary to also provide for dividends to be paid at the rate of 30% of 2020s after-tax profits.