RETURN ON EQUITY Pacific Packaging's ROE last year was only 3 %; but its management has developed a new operating plan that calls for a debt-to-capital ratio of ( 60 % ), which will result in annual interest charges of ( $ 400,000 ). The firm has no plans to use preferred stock and total assets equal total invested capital. Management projec

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RETURN ON EQUITY Pacific Packaging's ROE last year was only 3 %; but its management has developed a new operating plan that calls for a debt-to-capital ratio of  ( 60  %  ), which will result in annual interest charges of  (  $ 400,000  ). The firm has no plans to use preferred stock and total assets equal total invested capital. Management projects an EBIT of  (  $ 720,000  ) on sales of  (  $ 10,000,000  ), and it expects to have a total assets turnover ratio of 1.6 . Under these conditions, the tax rate will be  ( 30  %  ). If the changes are made, what will be the company's return on equity? Do not round intermediate calculations. Round your answer to two decimal places.  %

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