RAK, Inc. has no debt outstanding and a total market value of $165,000. Earnings before interest and taxes, EBIT, are projected to be $21,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 25% higher. If there is a recession, then EBIT will be 35% lower. The company is considering a $60,000 debt issue with an interest rate of 7%. The proceeds will be used to repurchase share of stock. There are currently 5,500 shares outstanding. Calculate EPS under each of the 3 economic scenarios before any debt is issued. Also calculate the percentage changes in EPS when the economy expands or enters a recession. Forecast the Net Income and EPS for all 3 scenarios if management decides to recapitalize. Calculate the percentage changes in EPS for all 3 scenarios if management decides to recapitalize. What is the break-even EBIT for RAK, Inc.? Is it advantageous for RAK, Inc. to borrow if the EBIT is greater than $12,000?