Castle, Inc. has no debt outstanding and a market value of $200,000. 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 25 percent lower. The firm is considering a debt issue of $65,000 with an interest rate of 6 percent. The proceeds will be used to repurchase shares of stock. There are currently 10,000 shares outstanding. Ignore taxes for questions a and b. Y MUUT utstanding. Ignore taxes and b. Assume the stock price remains constant. 2-1. Calculate return on equity (ROE) under each of the three economic scenarios before any debt is issued. (Do notre Intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, eg. 32.16.) ROE Recession Normal Expansion --2. Calculate the percentage changes in ROE when the economy expands or enters a recession. (A negative answer Indicated by a minus sign. Do not round Intermediate calculations. Enter your answers as a percent rounded to the number, e.g. 32.) mework Saved Assume the firm has a tax rate of 35 percent 1. Calculate return on equity (ROE) under each of the three economic scenarios before any debt is issued. (Do not round Intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) ROE Recession Normal Expansion 3 c-2. Calculate the percentage changes in ROE when the economy expands or enters a recession (A negative answer shoul Indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to the neare number, e.g. 32.) change in ROE Recession Expansion c-3. Calculate the retum on equity (ROE) under ench of the three economic scenarios assuring the firm goes through with me recapitalization. Do not round Intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, eg, Prev Next Recession Expansion 3. Calculate the return on equity (ROE) under each of the three economie scenarios assuming the firm goes through with the recaptation (Do not found intermediate calculations. Enter your answers as a percent rounded to 2 decimet 24h the recitation calculate the percentage changes in ROE when the economy expands or enters negative should be indicated by a minus sign. Do not round Intermediate calculations. Enter your rounded to 2 decimal places... 32.16)