H7. Minion, Inc., has no debt outstanding and a total market value of $180,00. Earnings before interest and taxes, EBIT, are projected to be $25,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 10% higher. If there is a recession, then EBIT will be 20% lower. The company is considering a $60,000 debt issue with an interest rate of 5%. The proceeds will be used to repurchase shares of stock. There are currently 6,000 shares outstanding. Ignore taxes for this problem.

a-1. Calculate earnings per share under each of the three economic scenarios before any debt is issued. (Round answer to 2 decimal places, e.g., 23.25%)

a-2. Calculate the percentage changes in earnings per share when the economy expands or enters a recession. (provide answer as percent rounded to 2 decimal places, e.g., 23.54%)

b-1. Calculate earnings per share under each of the three economic scenarios assuming the company goes through with recapitalization. (round answer to 2 decimal places, e.g., 23.32)

b-2. Given the recapitalization, calculate the percentage changes in earnings per share when the economy expands or enters a recession. (provide answer as a percent rounded to 2 decimal places, e.g., 23.23%)