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RAK, Inc., has no debt outstanding and a total market value of $200,000. Earnings to taxes, EBIT, are projected to be $24,000 if economic conditions
RAK, Inc., has no debt outstanding and a total market value of $200,000. Earnings to taxes, EBIT, are projected to be $24,000 if economic conditions are normal there is strong in the economy, then EBIT will be 15 percent higher. If there is a recession, then EBIT will be 30 percent RAK is considering a $70,000 debt issue with an interest rate of 7 percent. The proceeds will be used to repurchase shares of stock. There are currently 8,000 shares outstanding. Ignore taxes for this problem a-1 Calculate earnings per share (EPS) under each of the three economic scenarios before any out issued. (Do not round intermediate calculations and round your answers to 2 decimal places e.g., 32. 16.) EPS $ Recession Normal Expansion Calculate the percentage changes in EPS when the economy expands or enters a rece Negative amounts should be indicated by a minus sign. Do not round interm alculations. Enter your answers as a Wotal market value of $200,000. Earnings before ferest and 10 to be 524.000 i economic conditions are normal there is wrong expansion in ULUMomy, then EBIT will be 15 percent higher. If there is a recension, then EBIT w be 10 percentowe RAK is considering a $70,000 debt issue with an interest rate of 7 percent. The proces w be used to repurchase shares of stock. There are currently 8.000 shares outstanding. Ignore taxes for this problem a-1 Calculate earnings per share (EPS) under each of the three economic scenarios before anys issued. (Do not round Intermediate calculations and round your answers to 2 decimal places e.... 32.16.) EPS Recession Normal $ Expansion a-2 Calculate the percentage changes in EPS when the economy expands or enters a recession (Negative amounts should be indicated by a minus sign. Do not round Intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Percentage changes in EPS Recession Expansion % % b-1 Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) EPS $ Recession Normal Expansion b-2 Given the recapitalization, calculate the percentage changes in EPS when the economy expands or
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