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Pacific Packaging's ROE last year was only 6%; but itsmanagement has developed a new operating plan that calls for adebt-to-capital ratio of 50%, which will result in annual interestcharges of $780,000. The firm has no plans to use preferred stockand total assets equal total invested capital. Management projectsan EBIT of $1,920,000 on sales of $20,000,000, and it expects tohave a total assets turnover ratio of 2.5. Under these conditions,the tax rate will be 30%. If the changes are made, what will be thecompany's return on equity? Do not round intermediate calculations.Round your answer to two decimal places.
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