Castle, Inc. has no debt outstanding and a market value of $150,000. Earnings before interest and taxes, EBIT, are projected to be $26,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 12 percent higher. If there is a recession, then EBIT will be 20 percent lower. The firm is considering a debt issue of $90,0

00 with an interest rate of 6 percent. The proceeds will be used to repurchase shares of stock. There are currently 10,000 shares outstanding. The firm has a tax rate 35 percent. Assume the stock price remains constant.

newconnect.meducation.com/flow/connect.htm Amanda Sethue Procesadomat Andes Meractice nature pins Con CM 14 Homework Help at Calculate eamings per share (EPS) under each of the three economic scenarios before any debt is issued. (Do not round Intermediate calculations and round your answers to 2 decimal places, e.g.32.16.) EPS Recession Normal Expansion 5 a-2. Calculate the percentage changes in EPS when the economy expends or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to the nearest whole number, e.... 32.) Percentage changes in EPS Recession Expansion b-1. Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through recapitalization (De not round Intermediate calculations and round your answers to 2 decimal places, ,0.32.16) EPS R510 Next > Percentage changes in FPS Recession Expansion b-1 Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g. 32,16.) EPS Recession Normal Expansion $ b-2. Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession negative answer should be indicated by a minus sign. Do not round Intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Percentage changes in EPS Recession 5 Expansion Prey 1 of 4 Next >