No-Toxic-Toys currently has $300,000 of equity and is planning an $120,000 expansion to meet increasing demand for its product. The company currently earns $105,000 in net income and the expansion will yield $52,500 in additional income before any interest expense. The company has three options: (1) Do not expand, (2) Expand and issue $120,000 in debt that requires 15% annual interest, or (3) Expand and raise $120,000 from equity financing. 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.)

No-Toxic-Toys currently has $300,000 of equity and is planning an $120,000 expansion to meet Increasing demand for ts product. The company currenty earns $105,000 In net Income and the expansion will yeld $52,500 in additional Income before any interest expense. The company has three optons: ) Do not expand, (2) Expand and issue $120,000 in debt that requires 15% annual interest, or (3] Expand and raise $120,000 from equity financing. 10 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 Don't Expand Financing Financin References Debt Equity Income before interest expense Interest expense Net income 05,000 Equity Return on equity 300,000 No-Toxic-Toys currently has $300,000 of equity and is planning an $120,000 expansion to meet Increasing demand for ts product. The company currenty earns $105,000 In net Income and the expansion will yeld $52,500 in additional Income before any interest expense. The company has three optons: ) Do not expand, (2) Expand and issue $120,000 in debt that requires 15% annual interest, or (3] Expand and raise $120,000 from equity financing. 10 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 Don't Expand Financing Financin References Debt Equity Income before interest expense Interest expense Net income 05,000 Equity Return on equity 300,000