Check my work 1 Exercise 10-1 (Algo) Debt versus equity financing LO A1 10 points Green Foods currently has $500,000 of equity and is planning an $200,000 expansion to meet increasing demand for its product. The company currently earns $125,000 in net income, and the expansion will yield $62,500 in additional income before any interest expense. eBook The company has three options: (1) do not expand, (2) expand and issue $200,000 in debt that requires payments of 9% annual interest, or (3) expand and raise $200,000 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.) Ask Print References 2 Debt Financing 3 Equity Financing 1 Don't Expand $ 125,000 0 Income before interest expense Interest expense Net income Equity Return on equity $ 125,000 $ 500,000 $ 500,000 % %