Fujita, Incorporated, has no debt outstanding and a total market value of $250,000. Earnings before interest and taxes, EBIT, are projected to be $19,000 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 30 percent lower. The company is considering a debt issue of $100,000 with an interest rate of 8 percent. The proceeds will be used to repurchase shares of stock. There are currently 10,000 shares outstanding. Ignore taxes for this problem. Assume the stock price is constant under all scenarios.

a-1.	Calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued. (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. (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. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
b-2.	Given the recapitalization, calculate the percentage changes in EPS 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., 32.16.)

\begin{tabular}{|l|l|l|} \hline a-1. Recession EPS & & \\ \hline a-1. Normal EPS & & \\ \hline a-1. Expansion EPS & & \\ \hline a-2. Recession percentage change in EPS & & % \\ \hline a-2. Expansion percentage change in EPS & & % \\ \hline b-1. Recession EPS & & \\ \hline b-1. Normal EPS & & \\ \hline b-2. Expansion EPS & & % \\ \hline b-2. Recession percentage change in EPS & & % \\ \hline b-2. Expansion percentage change in EPS & & \\ \hline \end{tabular}