River Cruises is all-equity-financed.

Current Data

Number of shares 100,000

Price per share $10

Market value of shares $1,000,000

State of the Economy

Profits before interest

Slump - $76,750

Normal - $128,500

Boom - $ - 190,000

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. (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.)

Outcomes

Number of shares = ???

Price per share = ???

Market value of shares = ???

Market value of debt = ???

State of the Economy Slump Normal Boom

Profits before interest 76,750 128,500 190,000

Interest ??? ??? ???

Equity Earnings ??? ??? ???

Earnings Per Share ??? ??? ???

Return on Shares ??? ??? ???