11 No-Toxic-Toys currently has $500,000 of equity and is planning an $200,000 expansion to meet increasing demand for its product. The company currently earns $125,000 in net income and the expansion will yield $62,500 in additional income before any interest expense. The company has three options: (1) Do not expand, (2) Expand and issue $200,000 in debt that requires 9% annual interest, or (3) Expand and raise $200,000 from equity financing. 2.9 points Required For each of the three options, 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 2 3 References Don't Expand Debt Financing Equity Financing Income before interest expense Interest expense Net income Equity Return on equity % %