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River Cruises is all - equity - financed. Current Data Number of shares 1 0 0 , 0 0 0 Price per share $ 1

River Cruises is all-equity-financed.
Current Data
Number of shares 100,000
Price per share $ 10
Market value of shares $ 1,000,000
Outcomes
State of the Economy
Slump Normal Boom
Profits before interest $ 73,000 $ 121,000 $ 182,500
Suppose it now issues $250,000 of debt at an interest rate of 10% and uses the proceeds to repurchase 25,000 shares. Assume that the firm pays no taxes and that debt finance has no impact on firm value. Refer to the above table to compute the missing data.
Note: Do not round intermediate calculations. Round "Earnings per share" to 3 decimal places. Enter "Return on shares" as a percent rounded to 2 decimal places.

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