The annual sales for Salco, Inc. were $4.56 million last year. The firm's end-of-year balance sheet & Salco's income statement for the year was as follows:

Current assets	$507,000	Liabilities	$995,500
Net fixed assets	1484000	Owners' equity	995500
Total Assets	$1,991,000	Total	$1,991,000
Sales	$4,560,000
Cost of goods sold	(3,494,000)
Gross profit	$1,066,000
Operating expenses	(507,000)
Net operating income	$559,000
Interest expense	(106,000)
Earnings before taxes	$453,000
Taxes (35%)	(158,550)
Net income	$294,450

c. Given that the plant renovation in part (b) occurs and Salco's interest expense rises by $52,000 per year, what will be the return earned on the common stockholders' investment?

Compare this rate of return with that earned before the renovation. Based on this comparison, did the renovation have a favorable effect on the profitability of the firm?