BuyUS Inc Plans to Issue 7%, $400,000, 10-Year Bonds in Order

BuyUS Inc. plans to issue 7%, $400,000, 10-year bonds in order to finance anexpansion. The expansion is expected to increase income before interest expense from$100,000 to $175,000. BuyUS has $1,000,000 in average common equity. Calculate the expected return on common shareholders' equity. ignore income taxes)

A) 43.8%.
B) 57.1%.
C) 14.7%.
D) 7.0%.
E) 20.0%.