Question: J Peterman Corp. has $ 4 2 5 , 0 0 0 of assets, and it does not use any debt to finance their operations.

J Peterman Corp. has $425,000 of assets, and it does not use any debt to finance their operations. Petermans
sales for the last year were $625,000, and its net income was $50,000. Stockholders recently voted in a new
management team that has promised to lower costs and get the return on equity up to 20%. What profit
margin would the firm need in order to achieve the 20% ROE, holding everything else constant?

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