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 $150,000 in net income, and the expansion will yield $75,000 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 payments of 10% annual interest, or (3) expand and raise $200,000 from equity financing. For each option, 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.)

1 2 3 Don't Expand Debt Financing Equity Financing Income before interest expense Interest expense Net income Equity Return on equity % %