No-Toxic-Toys currently has $400,000 of equity and is planning an $160,000 expansion to meet increasing demand for its product. The company currently earns $140,000 in net income, and the expansion will yield $70,000 in additional income before any interest expense.

The company has three options: (1) do not expand, (2) expand and issue $160,000 in debt that requires payments of 9% annual interest, or (3) expand and raise $160,000 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.)