Consider the following information about Firm ABC:

Firm ABC Overview

Number of Shares $100,000$

Price per share $$10$

Market value of shares $$1,000,000$

Scenarios: State of the Economy $($based on Slump Normal Boom$)$

Operating Income $$75,000$ $$125,000$ $$175,000$

Earnings per share $$0\mathrm{.}75$ $$1\mathrm{.}25$ $$1\mathrm{.}75$

Return on shares $7\mathrm{.}5\%12\mathrm{.}5\%17\mathrm{.}5\%$

Assume ABC is currently an all$-$equity financed firm and not subject to taxes. The company also has no debt, and all its operating income is paid as dividends to the shareholders. The executive team at ABC is considering whether to borrow $$500,000$ dollars and repurchase $50,000$ shares.

Would you recommend the executives proceed with their plan? You should clearly show AND explain any calculations you make. Your conclusion should be concise and intuitive, i$.$e$.,$ understandable by a non$-$subject expert.