Zorn Corporation is deciding whether to pursue a restricted or relaxed working capital investment policy. The firm's annual sales are expected to total $3,300,000, its fixed assets turnover ratio equals 5.0, and its debt and common equity are each 50% of total assets. EBIT is $201,000, the interest rate on the firm's debt is 9%, and the tax rate is 40%. If the company follows a restricted policy, its total assets turnover will be 2.5. Under a relaxed policy its total assets turnover will be 2.2.
What's the difference in the projected ROEs under the restricted and relaxed policies? Do not round intermediate calculations.