The work from home clothes ("fitness") apparel industry is booming, and as a savvy business professional you decide it is time to grab a piece of the pie. Your venture, LuluMelon, is at its inception and you are assessing your options. After carefully evaluating the business proposal, you are quite certain that the annual sales will amount to $490500 with 66% cost of goods, material and other variables. You have estimated the annual expenses to be about $121500 covering the salary and other fixed costs associated with the business. Long term lenders are willing to offer $437250 to fund your venture, expecting a 3% annual return. With this debt driven business model, you need to raise only $132750 to start. Another option is to raise $388500 through capital shares, in which case the long term debt will be $181500, with 9% returns annually. Assuming total assets valued at $556250, evaluate the two options and calculate the (a) Leverage, (b) Net Income, and (c) Return on Equity using the above data. Please input all the numbers. In case of negative quantity, include the negative sign in your answer. For percentage, use up to two decimal places. Income Statement Debt Driven Shares Driven Sales $490500 $490500 COGS $323730 $323730 Cost Margin $166770 $166770 SG&A $121500 $121500 Operating Income $45270 $45270 Balance Sheet (Partial) Total Assets $556250 $556250 Long Term Debt $437250 $181500 Interest Rate 3% 9% Current Portion of Long Term Debt $ $ Capital Shares Leverage $132750 $388500 85 % % Net Income Return on Equity $ % %