Fujita, Incorporated, has no debt outstanding and a total market value of $$382,500.$ Earnings before interest and taxes, EBIT, are projected to be $$52,000$ if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be $14$ percent higher. If there is a recession, then EBIT will be $23$ percent lower. The company is considering a $$190,000$ debt issue with an interest rate of $7$ percent. The proceeds will be used to repurchase shares of stock. There are currently $8,500$ shares outstanding. Ignore taxes for questions $($a$)$ and $($b$).$ Assume the company has a market$-$to$-$book ratio of $1\mathrm{.}0$ and the stock price remains constant.

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$.,32\mathrm{.}16.)$ a$-1.$ Recession ROE $\%$

a$-1.$ Normal ROE $\%$

a$-1.$ Expansion ROE $\%$

a$-2.$ Recession percentage change in ROE $\%$

a$-2.$ Expansion percentage change in ROE $\%$

b$-1.$ Recession ROE $\%$

b$-1.$ Normal ROE $\%$

b$-1.$ Expansion ROE $\%$

b$-2.$ Recession percentage change in ROE $\%$

b$-2.$ Expansion percentage change in ROE $\%$