The following information is from the 2016 annual report of Tellarite Company, a company that supplies manufactured parts to the phaser industry.

Average total assets.............................. $24,500,000

Average interest-bearing debt................. 10,000,000

Average other liabilities............................. 2,250,000

Average shareholders' equity.................. 12,250,000

Sales......................................................... 49,000,000

Interest expense........................................... 800,000

Net income................................................. 2,450,000

REQUIRED:

1.Show the calculation of Tellarite's ROA for 2016 using a combined federal and state income tax rate of 40% where needed.

2.Show the calculation of the profit margin and turnover components of ROA for 2016.

3.Tellarite's management believes that various business initiatives will produce an asset turnover rate of 2.25 next year. If the profit margin next year is unchanged from 2016, what will be the company's ROA? Please show the calculation.