Fujita, Incorporated, has no debt outstanding and a total market value of $284,900. Earnings before interest in taxes, event, are projected to be $44,000. If economic conditions are normal. If there's a strong expansion in the economy, then EBIT will be 18% higher. If there is a recession, then if it will be 29% lower. The company is considering oh $150,000 debt issue with an interest rate of 7%. The proceeds will be used to re-purchase shares of stock. There are currently 7700 shares outstanding. Ignore taxes for questions a and B. Assume the company has a market to book ratio of 1.0 and the stock price remains constant.

a-1. calculate return on equity, are OE, under each of the three economic scenarios before any debt is issued.

a-2. Calculate the percentage changes in Oro year when the economy expands or enters a recession.

b-1. Assume the firm goes through the proposed recapitalization. Calculate the return on equity under each of the three economic scenarios.

b-2. Assume the firm goes through with the proposed recapitalization. Calculate the percentage changes in ROU when the economy expands, or enters a recession.

Fujita, Incorporated, has no debt outstanding and a total market value of $284,900. Earnings before interest and taxes, EBIT, are projected to be $44,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 18 percent higher. If there is a recession, then EBIT will be 29 percent lower. The company is considering a $150,000 debt issue with an interest rate of 7 percent. The proceeds will be used to repurchase shares of stock. There are currently 7.700 shares outstanding. Ignore taxes for questions (o) and (b). Assume the company has a market-to-book ratio of 1.0 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. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.9., 32.16. a.2. Calculate the percentage changes in ROE when the economy expands or enters a recession. Note: 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., 32.16. b.1. Assume the firm goes through with the proposed recapitalization. Calculate the return on equity. ROE, under each of the three economic scenarios. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.9., 32.16. 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. Note: 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., 32.16