Green Foods currently has $350,000 of equity and is planning an $140,000 expansion to meet increasing demand for its product. The company currently earns $122,500 in net income, and the expansion will yield $61,250 in additional income before any interest expense.

The company has three options: (1) do not expand, (2) expand and issue $140,000 in debt that requires payments of 15% annual interest, or (3) expand and raise $140,000 from equity financing. For each option, compute (a) net income and (b) return on equity (Net Income Equity). Ignore any income tax effects.