Green Foods currently has $550,000 of equity and is planning an $220.000 expansion to meet increasing demand for its product. The company currently earns $110,000 in net income, and the expansion will yield $55,000 in additional income before any interest expense. The company has three options: (1) do not expand, (2) expand and issue $220,000 in debt that requires payments of 13% annual interest, or (3) expand and raise $220,000 from equity financing. For each option, compute (a) net income and (b) return on equity (Net Income = Equity). Ignore any income tax effects. Note: Round "Return on equity" to 1 decimal place. Income before interest expense Interest expense Net income Equity Return on equity 1 Don't Expand 2 Debt Financing 3 Equity Financing $ 110.000 55,000 20.0 % % %

Green Foods currently has $550,000 of equity and is planning an $220,000 expansion to meet increasing demand for its product. The company currently earns $110,000 in net income, and the expansion will yield $55,000 in additional income before any interest expense. The company has three options: (1) do not expand. (2) expand and issue $220.000 in debt that requires payments of 13% annual interest, or ( ) expand and raise $220,000 from equity financing, For each option, compute (a) net income and (b) return on equity (Net. Income Equity). Ignore any income tax effects. Note: Round "Return on equity" to 1 decimal place