Question: Belkin currently has $ 2 5 0 , 0 0 0 of equity and is planning a $ 1 0 0 , 0 0 0

Belkin currently has $250,000 of equity and is planning a $100,000 expansion to meet increasing demand for its electronics. Belkin currently earns $70,000 in net income, and the expansion will yield $35,000 in additional income before any interest expense. The company is considering three separate options: (1) do not expand, (2) expand and issue $100,000 in debt that requires payments of 10% annual interest, or (3) expand and raise $100,000 from equity financing. For each option compute (a) net income and (b) return on equity (Net income -: Equity).

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