Fujlta, Incorporated, has no debt outstanding and a total market value of $$250,000.$

Earnings before Interest and taxes, EBIT, are projected to be $$40,000$ If economic

conditions are normal. If there is strong expansion In the economy, then EBIT will be $20$

percent higher. If there is a recession, then EBIT will be $20$ percent lower. The company

is considering a $$105,000$ debt issue with an Interest rate of $4$ percent. The proceeds

will be used to repurchase shares of stock. There are currently $10,000$ shares

outstanding. Ignore taxes for this problem.

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

before any debt is Issued. $($Do not round Intermedlate calculations and round your

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

a$-2.$ Calculate the percentage changes in EPS when the economy expands or enters a

recession. $($A negative answer should be Indlcated by a minus sign. Do not round

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

decimal places, e$.$g$.,32\mathrm{.}16.)$

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

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

economy expands or enters a recession. $($A negative answer should be Indlcated

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

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