Ghost, Inc., hos no debt outstanding and total market value of $284,900. Earnings before interest and taxes, EBIT, are projected to be $44.000 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 29 percent lower. The company is considering $150.000 debt issue with an interest rate of 7 percent. The proceeds will be used to repurchase shares of stock. There are currently 7,700 shares outstanding Ignore taxes Tor questions and b. Assume the company has a market-to-book ratio of 10 and the stock price remains constant. 2-1. 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, eg. 32.16.) 3-2. 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 found Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g4 32.16.) b.1. Assume the firm goes through with the proposed recapitalization. Calculate the return on equity (ROE) under each of the three economic scenarios. (Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e 9.3216.) b 2. Assume the firm goes through with the proposed recapitalization Calculate the percentage changes in ROE when the economy expands or enters a recension. 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) -1. Recession ROC Normal ROC Canin ROC Recesso pronage change in ROG Expansion percentage change in ROC D-1 Recon ROC Normal ROC Expansion ROG 0-2 Recon gran change in ROE Espannage change in ROC 10.07 15. 1022 20.00 18.00 15.37 30.70 Assume the firm has a tax rate of 22 percent 41. Calculate return on equity ROE) under och 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. 32.163 02. Calculate the percentage changes in ROE when the economy exponds or enters a recension (A negative answer should be indicated by a mission. Do not found Intermediate calculations and enter your answers as a percent rounded to 2 decimal places eg.22161 3. Calculate the return on equity (ROE) under each of the three economic scenarios isuring the form goes through with the recepitalization (Do not round Intermediate calculations and enter your answers as a percent rounded 12 decimal places 2.32.16) 04. Given the recapitalization. Colculate the percentage changes in ROE when the economy expends or enters recession (A negative answer should be indicated by a minus sign. Do not found intermediate calculations and enter you wers as a percent rounded to 2 decimal places. 12.63 Ghost, Inc., hos no debt outstanding and total market value of $284,900. Earnings before interest and taxes, EBIT, are projected to be $44.000 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 29 percent lower. The company is considering $150.000 debt issue with an interest rate of 7 percent. The proceeds will be used to repurchase shares of stock. There are currently 7,700 shares outstanding Ignore taxes Tor questions and b. Assume the company has a market-to-book ratio of 10 and the stock price remains constant. 2-1. 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, eg. 32.16.) 3-2. 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 found Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g4 32.16.) b.1. Assume the firm goes through with the proposed recapitalization. Calculate the return on equity (ROE) under each of the three economic scenarios. (Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e 9.3216.) b 2. Assume the firm goes through with the proposed recapitalization Calculate the percentage changes in ROE when the economy expands or enters a recension. 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) -1. Recession ROC Normal ROC Canin ROC Recesso pronage change in ROG Expansion percentage change in ROC D-1 Recon ROC Normal ROC Expansion ROG 0-2 Recon gran change in ROE Espannage change in ROC 10.07 15. 1022 20.00 18.00 15.37 30.70 Assume the firm has a tax rate of 22 percent 41. Calculate return on equity ROE) under och 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. 32.163 02. Calculate the percentage changes in ROE when the economy exponds or enters a recension (A negative answer should be indicated by a mission. Do not found Intermediate calculations and enter your answers as a percent rounded to 2 decimal places eg.22161 3. Calculate the return on equity (ROE) under each of the three economic scenarios isuring the form goes through with the recepitalization (Do not round Intermediate calculations and enter your answers as a percent rounded 12 decimal places 2.32.16) 04. Given the recapitalization. Colculate the percentage changes in ROE when the economy expends or enters recession (A negative answer should be indicated by a minus sign. Do not found intermediate calculations and enter you wers as a percent rounded to 2 decimal places. 12.63
