Fujita, Incorporated, has no debt outstanding and a total market

value of $$222,000.$ Earnings before interest and taxes, EBIT, are

projected to be $$18,000$ if economic conditions are normal. If there

is strong expansion in the economy, then EBIT will be $25$ percent

higher. If there is a recession, then EBIT will be $30$ percent

lower. The company is considering a $$60,000$ debt issue with an

interest rate of $7$ percent. The proceeds will be used to repurchase

shares of stock. There are currently $7,400$ 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$.,32\mathrm{.}16.)$