Fowler, Inc., has no debt outstanding and a total market value of $$200,000.$ Earnings before interest and taxes, EBIT, are projected to be $$24,000$ if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be $15$ percent higher. If there is a recession, then EBIT will be $30$ percent lower. The firm is considering a debt issue of $$70,000$ with an interest rate of $7$ percent. The proceeds will be used to repurchase shares of stock. There are currently $8,000$ shares outstanding. Ignore taxes for questions $($a$)$ and $($b$).$ Assume the stock price is constant under all scenarios.

a$-1.$ Calculate return on equity $($ROE$)$ under each of the three economic scenarios before any debt is issued. $($Do not round intermediate calculations and enter your answers as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

a$-2.$ Calculate the percentage changes in ROE when the economy expands or enters a recession. $($A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

b$-1.$ Assume the firm goes through with the proposed recapitalization. Calculate the return on equity $($ROE$)$ under each of the three economic scenarios. $($Do not round intermediate calculations and enter your answers as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

b$-2.$ Assume the firm goes through with the proposed recapitalization. Calculate the percentage changes in ROE when the economy expands or enters a recession. $($A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

Assume the firm has a tax rate of $23$ percent.

c$-1.$ Calculate return on equity $($ROE$)$ under each of the three economic scenarios before any debt is issued. $($Do not round intermediate calculations and enter your answers as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

c$-2.$ Calculate the percentage changes in ROE when the economy expands or enters a recession. $($A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to the nearest whole number, e$.$g$.,32.)$

d$-1.$ Assume the firm goes through with the proposed recapitalization. Calculate the return on equity $($ROE$)$ under each of the three economic scenarios. $($Do not round intermediate calculations. Enter your answers as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

d$-2.$ Assume the firm goes through with the proposed recapitalization. Calculate the percentage changes in ROE when the economy expands or enters a recession. $($A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$