Company XXX has no debt outstanding and a total market value of $$295,000.$ EBIT are projected to be $$23,000$ if economic conditions are normal. If there is a strong expansion in the economy, then EBIT will be $25$ percent higher. If there is a recession, then EBIT will be $40\%$ lower. The company is considering an $$88,500$ debt issue with an interest rate of $8\%($the proceeds will be used to repurchase shares of stock$).$ There are currently $5000$ shares outstanding and the tax rate is $35\%.$ The market to book ratio for the company is $1.$ Calculate EPS and ROE under each of the three economic scenarios before debt is issued. Repeat the exercise and compute EPS and ROE after debt is issued. Which capital structure presents more risk?