The annual sales forSalco, Inc. were $4.75 million last year.

Thefirm's end-of-year balance sheet was asfollows:

Current assets

$ 501000

Liabilities

$1,005,000

Net fixed assets

$1,509,000

Owners' equity

$1,005,000

Total Assets

$2,010,000

Total

$2,010,000

Salco's income statement for the year was asfollows:

Sales

$4,750,000

Less: Cost of goods sold

(3,495,000)

Gross profit

$1,255,000

Less: Operating expenses

(493,000)

Net operating income

$762,000

Less: Interest expense

(90,000)

Earnings before taxes

$672,000

Less: Taxes (35 %)

(235,200)

Net income

$436,800

Salco plans to renovate one of its plants and the renovation will require an added investment in plant and equipment of $ 1.07

$1.07 million. The firm will maintain its present debt ratio of 50

50 percent when financing the new investment and expects sales to remain constant. The operating profit margin will rise to 13.9

13.9 percent. What will be the new operating return on assets ratio(i.e., net operating incomedivided by

total assets) for Salco after theplant's renovation?

Thecompany's new operating return on assets is?