Fujta, Incorporated, has no debt outstanding and a total market value of $$200,000.$

Earnings before interest and taxes, EBIT, are projected to be $$14,000$ 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 $20$ percent lower. The company

Is considering a debt issue of $$75,000$ with an interest rate of $8$ percent. The proceeds

will be used to repurchase shares of stock. There are currently $8,000$ shares

outstanding. Ignore taxes for this problem. Assume the stock price is constant under all

scenarlos.

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 Indicated 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 scenarios

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

economy expands or enters a recession. $($A negatlve answer should be Indicated

by a minus sign. Do not round intermedlate calculations and enter your answers

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