Green Foods currently has $200,000 of equity and is planning an $80,000 expansion to meet increasing demand for its product. The company currently earns $50,000 in net income, and the expansion will yield $25,000 in additional income before any interest expense.

The company has three options: 

(1) Do not expand, 

(2) Expand and issue $80,000 in debt that requires payments of 8% annual interest, or 

(3) expand and raise $80,000 from equity financing. For each option, compute 

(a) Net income and 

(b) Return on equity (Net income ÷ Equity). Ignore any income tax effects.