Non-toxic-toys currently has $400,000 of equity and is planning a $160,000 expansion to meet increasing demand for its product. the company currently earns $100,000 in net income and the expansion will yield $50,000 in additional income before any interest expense. the company has 3 options; do not expand, expand and issue $160,000 in debt that requires 8% annual interest, or expand and raise $160,000 from equity financing. for each of the 3 options compute a) net income b) return on equity.

1. $100,000 and 25%

2. $137,200 and 34.3%

3. $150,000 and 27%

Explanation:

1.It does not expand

    a.Net income= $100,000 (as given in the question)

    b.Return on equity= (net income)/(shareholder’s equity)

Shareholder’s equity= $400,000

Thus return on equity= 100000/400000 = 0.25  or 25%

2.It expands and issue $160,000 in debt

    a.Net income= $100000 + 50000 –  12800 (debt interest 8% of     $160000)

= $137,200

b.Return on equity= (net income)/(shareholder’s equity)

= 137200/400000

=0.343  or 34.3%

3.It expands and raises equity of $160000

a.Net Income= $100000 + 50000

= $150000

b.Return on equity= (net income)/(shareholder’s equity)

= 150000/(400000 + 160000)

Where ($560,000) 400000 + 160000 is shareholder’s equity

= 0.27 or 27%

the correct answer would be b, when, queen, calder hall and london.

explanation:

we always capitalize words when a paragraph or sentence is starting, when an important name is used, when a place is being written, or simply when a noun is used, etc. so in this sentence, sentence is starting from 'when', so it will be written in capital letters. secondly, queen is considered to be an important person, so it will also be written in capital letter. next, the name of the town is mentioned, i-e calder hall, which will also be written in capital letters. in the last,   city name is being used, 'london', which will also be written in capital letters. so option b is the most appropriate one.

answercombination of ability and experience of the partners;