No$-$Toxic$-$Toys currently has $$500,000$ of equity and is planning

an $$200,000$ expansion to meet increasing demand for its product.

The company currently earns $$175,000$ in net income, and the

expansion will yield $$87,500$ in additional income before any

interest expense.$$

$$

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.$)$