No-Toxic-Toys currently has $200,000 of equity and is planning an $80,000 expansion to meet increasing demand for its product. The company currently earns $50,000 in net income, and the expansion will yield $25,000 in additional income before any interest
expense.
The company has three options: (1) do not expand, (2) expand and issue $80,000 in debt that requires payments of 8% annual interest,
or (3) expand and raise $80,000 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.)