Saved Ghost, Inc., has no debt outstanding and a total market value of $200,000. Earnings before interest and taxes, EBIT, are projected to be $24,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 15 percent higher. If there is a recession, then EBIT will be 30 percent lower. The company 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 0-1. Calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) a-2. Calculate the percentage changes in EPS when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b-1. Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g.. 32.16.) b-2. Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession (A negative answer should be indicated by o minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g. 32.16.) 3.1. Recession EPS Nome EDS Expansion EPS 2. Recension percentage change in EPS Expansion percentage change in EPS Prev 10 of 15 !!! a-2. Calculate the percentage changes in EPS when the economy exp recession. (A negative answer should be indicated by a minus s intermediate calculations and enter your answers as a percent decimal places, e.g., 3216.) b-1. Calculate earnings per share (EPS) under each of the three econo assuming the company goes through with recapitalization. (Do no intermediate calculations and round your answers to 2 decimal 32.16.) b-2. Given the recapitalization, calculate the percentage changes in EF economy expands or enters a recession: (A negative answer shou by a minus sign. Do not round intermediate calculations and ent as a percent rounded to 2 decimal places, e.g., 32.16.) a-1. Recession EPS Normal EPS Expansion EPS 2. Recession percentage change in EPS Expansion percentage change in EPS 6.1. Recession EPS Normal EPS 5-2. Expansion EPS Recession percentage change in EPS Expansion percentage change in EPS Pre
