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Motors \& Co has no debt outstanding and a total market value of 12.68 billion. Earnings before interest and taxes, EBIT, are projected to be 2.56 billion if economic conditions are normal. If there is strong expansion in the economy then EBIT will be 30 per cent higher. If there is a recession, then EBIT will be 60 per cent lower. Motors & Co is considering a 2 billion debt issue with a 5 per cent interest rate. The proceeds will be used to repurchase shares of equity. There are currently 1 billion shares outstanding. Ignore taxes for this problem. Suppose that Motors \& Co has a book value of 12.68 billion. A) Calculate return equity (ROE) under each of the three economic scenarios before any deb is issues. Also calculate the percentage changes in ROE for economic expansion and recession, assuming no taxes. B) Repeat part a) assuming the firm goes through with the proposed recapitalization. C) Repeat parts a) and b) of this problem assuming the firms has a tax rate of 20 per cent. D) Compare the absolute levels of ROE and percentage changes in ROE calculated in a) and b). Explain your results. Are ROEs and ROE changes the same in a) and b)? Are they different? Explain your results