Fujita, Incorporated, has no debt outstanding and a total market value of $$251,600.$

Earnings before interest and taxes, EBIT, are projected to be $$41,000$ 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 $26$ percent lower. The

company is considering a $$135,000$ debt issue with an interest rate of $8$ percent. The

proceeds will be used to repurchase shares of stock. There are currently $7,400$ shares

outstanding. The company has a tax rate of $24$ percent, a market$-$to$-$book ratio of $1\mathrm{.}0,$ and

the stock price remains constant.

$0-1.$ Calculate earnings per share $($EPS$)$ under each of the three economic scenarios

before any debt is issued. $($Do not round Intermedlate colculations and round

your answers to $2$ declmal places, e$.$g$.,32\mathrm{.}16.)$

$0\mathrm{.}2.$ Calculate the percentage changes in EPS when the economy expands or enters a

recession. $($A negatlve onswer should be Indlcated by a minus sign. Do not round

Intermedlate caleulations and enter your answers as a percent rounded to $2$

declmal ploces, e$.$g$.,32\mathrm{.}16.)$

b$-1.$ Calculate earnings per share $($EPS$)$ under each of the three economic scenarios

assuming the company goes through with recapitalization. $($Do not round

Intermedlate calculations and round your answers to $2$ decimal places, e$.$g$.,$

$32\mathrm{.}16.)$

b$-2.$ Given the recapitalization, calculate the percentage changes in EPS when the

economy expands or enters a recession. $($A negatlve onswer should be Indlcoted

by a minus slgn$.$ Do not round Intermedlate calculatlons and enter your answers

as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

Answer is complete but not entirely correct.