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Req $1$ and $2$

Frenza is planning an $$160,000$ expansion to launch a new product line. Frenza currently earns $$100,000$ in net income, and

the new product line will yield $$50,000$ in additional income before any interest expense. Frenza 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

$$160,000$ from equity financing. For each option $1,2,$ and $3,$ compute $($a$)$ net income and $($b$)$ return on equity $($Net income $$

Equity$).$ Ignore any income tax effects. $($Round "Return on equity" to $1$ decimal place.$)$