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Fujita, Incorporated, has no debt outstanding and a total market value of $262,500. Earnings before interest and taxes, EBIT, are projected to be $42,000 if

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Fujita, Incorporated, has no debt outstanding and a total market value of $262,500. Earnings before interest and taxes, EBIT, are projected to be $42,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 16 percent higher, If there is a recession, then EBIT will be 27 percent lower. The company is considering a $140,000 debt issue with an interest rate of 5 percent. The proceeds will be used to repurchase shares of stock. There are currently 7,500 shares outstanding. The company has a tax rate of 25 percent, a market-to-book ratio of 100 , and the stock price remains constant. a-1. Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g. 32,16. a-2. Calculate the percentage changes in EPS 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. Calculate earnings per share, EPS, under each of the three economic scenarios assuming the company goes through with recapitalization. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.9., 32.16. b-2. Given the recapitalization, calculate the percentage changes in EPS when the econcmy 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.9., 32.16

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