7. Saskatoon Food Processing (SFP) has 5 million shares with current market value of $16 per share and no debt. SFP produces and sells canned food. SFPs experience suggests that sales can vary from 8 million cans in the worst-case scenario, 10 million cans under normal circumstances, to 12 million cans under excellent economic conditions. SFP keeps the price per can fixed at $5 regardless of the economic scenario. On average, the variable cost per can is $3.0 while the fixed costs (selling, administrative, and plant) are approximately $12 million per year.\ a. What would be the earnings per share (EPS) and the return on equity (ROE) under each of the scenarios predicted by SFP? (4 marks)\ Source Amount of Change Source Amount of Change\ Revenues Increase $42,500 Taxes Increase $3,000\ Costs Increase $12,000 Capital Requirements Increase $1,500\ \ \ \ b. SFP is considering leverage. Management would like to have a debt-to-equity ratio (D/E) of 60%. How much debt they should issue to achieve this objective? And how many shares will remain outstanding after the leverage? (4 marks)\ \ \ \ c. SFP borrows $30 million at 8% per annum. Under the new capital structure, what would be the earnings per share (EPS) and the return on Equity (ROE) under each of the scenarios predicted by SFP? (4 marks) Hint: Use a table like the table in part a expect now there are interest payments.\ \ \ \ d. What is the degree of financial leverage (DFL) at a sales level of 10 million cans and D/E ratio of 0.6? (4 marks)\ \ \ \ e. At a D/E ratio of 0.6, what is the break-even EBIT? (4 marks)