$13\mathrm{.}8.$ A local entrepreneur is looking for investors in a new company that will develop mobile apps for behavioral health. The company requires $$15$ million in start$-$up funds. It can be capitalized with $100$ percent equity financing or with $30$ percent debt and $70$ percent equity. EBIT is $$3$ million, and the company will pay taxes at a rate of $30$ percent. Debt financing would bear an interest rate of $7$ percent.

a$.$ What would be the firm's net income, total dollar return to investors, and ROE with $100$ percent equity financing?

b$.$ What would be the firm's net income, total dollar return to investors, and ROE with $30$ percent debt financing and $70$ percent equity financing?

c$.$ What factors should the investors consider when deciding on the