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Green Foods currently has $400,000 of equity and is planning an $160,000 expansion to meet...

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Accounting

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Green Foods currently has $400,000 of equity and is planning an $160,000 expansion to meet increasing demand for its product. The company currently earns $80,000 in net income, and the expansion will yield $40,000 in additional income before any interest expense. The company has three options: (1) do not expand, (2) expand and issue $160,000 in debt that requires payments of 8% annual interest, or (3) expand and raise $160,000 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

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