2. Bubba Gump, Inc. currently has $200,000 of equity. Gump plans an $80,000 expansion to meet increasing demand for its product. According to its latest Income Statement, Gump earns $50,000 in Net Income. Gump's management accountants predict that the expansion will yield $25,000 in additional income before any interest expense. Gump has three options. Which option will provide the greatest return on equity for Gump?

a.Do not expand.

b.Expand and issue $80,000 in debt that requires payments of 8% interest

c.Expand and raise $80,000 from equity financing.

d.None of the above.