calculate the net income for the economic state recession, normal growth and boom

Maya Bobi identified two potential capital projects that meet the criteria of acceptance by her firm. However, the firm needs R250 000 additional capital to finance these projects. Her firm could finance the additional capital requirement with 100% debt capital or could finance it with 50% debt and 50% equity (in which case 5 000 new shares will be issued). The applicable interest rate is 10%. The firm currently has no other debt. The current number of outstanding shares is 10 000. The required rate of return for the firm is 19.25%. Maya estimates the following levels of Earnings before interest and tax (EBIT) associated with the new projects: Normal Economic state Recession Boom growth and probability (0.3) (0.4) (0.3) EBIT 60 000 80 000 100 000 If the firm decides to finance the additional capital with debt only, then the share price will be R20.57. Maya would like to determine whether she should recommend the debt only as a means to finance the additional capital or whether the 50% debt and 50% equity option should be adopted. Use the following template to assist you in answering the questions regarding the 50% debt and 50% equity option