1)ebit and leverage ghost inc., has no debt oustanding and a total market value of $185,000 Earnings before interest and taxes, EBIT are projected to be $29000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 30 percent higher. If there is a recession , then EBIT will be 40 percent lower. The company is considering a $65000 debt issue with an interest rate of 7 percent. The proceeds will be used to repurchase shares of stock . There are currently 7400 shares outstanding. Ignore taxes for this problem. a) Calculate earnings per share (EPS) under each of the three economic scenarious before any debt is issued b) Calculate the percentage changes in EPS when the ecnonomy expands or enters a recession c) Repeat part (a) assuming that the company goes through with recapitalization. What do you observe? ROE and Leverage Suppose the company in probem 1 has a market to book ratio of 1.0 and the stock price remains constant a) calculate return on equity (ROE) under each of the three economic scenarios before any debt is issued. Also calculate the percentage changes in ROE for economic expansion and recession, assuming to taxes b) repeat part (a) assuming the firm goes through with the proposed recapitalization c) Repeat parts (a) and (b) of this problem assuming the firm has a tax rate of 21 percent. Please do not do it on excel or word. Show full formula