1 Exercise 10-1 (Algo) Debt versus equity financing LO A1 10 points Green Foods currently has $450,000 of equity and is planning an $180,000 expansion to meet increasing demand for its product. The company currently earns $157,500 in net income, and the expansion will yield $78,750 in additional income before any interest expense. The company has three options: (1) do not expand, (2) expand and issue $180,000 in debt that requires payments of 9% annual interest, or (3) expand and raise $180,000 from equity financing. For each option, compute (a) net income and (b) return on equity (Net Income - Equity). Ignore any income tax effects. (Round "Return on equity" to 1 decimal place.) eBook 1 Don't Expand 2 Debt Financing 3 Equity Financing Ask Income before interest expense Interest expense Net income Equity Return on equity Print % % % References