GTB$,$ Incorporated has a $21$ percent tax rate and has $ $100$ million in assets, currently financed entirely with equity. Equity is worth $ $7$ per share, and book value of equity is equal to market value of equity. Also, let's assume that the firm's expected values for EBIT depend upon which state of the economy occurs this year, with the possible values of EBIT and their associated probabilities as shown below:GTB$,$ Incorporated has a $21$ percent tax rate and has $$100$ milion in assets, currently financed entirely with equity. Equity is worth $$7$

per share, and book value of equity is equal to market value of equity. Also, let's assume that the firm's expected values for EBIT

depend upon which state of the economy occurs this year, with the poss ble values of EBIT and their associated probab lities as shown

below:

The firm is considering switching to o $40-$percent$-$debt capital structure ond has determined that it would have to poy o $12$ percent

yield on perpetual debt in either event. What will be the standard deviation in EPS if it switches to the proposed capital structure and

con take full advantage of the debs interest tox shields?

Note: Do not round intermediste calculations and round your final answer to $2$ decimal places.

NoNuns Componles has a $21$ percent tax rote and has $$350$ million in assets, currently fingriced entirely with equiry Equity is worth

$$37$ per share, and book value of equity is equal to market value of equity. Also, lets assume that the firmic expected values fon EBir

below

The firm is carsiderng switching to a $20$ percent$-$debt capital structure and has desermined that at would have to pay an $8$ petcent

yeld on pepetual debt he either event. What will be the standard deviation in EPS i NoNuns swiches to the proposed rapital suructure

ord con toke full odvarrege of the debt interest tor shields?

Note: Do not round intermediste calculations and round your finsl answer to the neorest whole dollar amount.

State,Pessimistic, Optimistic

Probability of state, $0\mathrm{.}45,0\mathrm{.}55$

Expected EBIT in state, $$5$ million, $$19$ million

The firm is considering switching to a $40-$percent$-$debt capital structure and has determined that it would have to pay a $12$ percent yield on perpetual debt in either event. What will be the standard deviation in EPS if it switches to the proposed capital structure and can take full advantage of the debt interest tax shields?