Shyster Financial, Inc. is currently an an all-equity firm with 150,000 shares outstanding. The firms annual operating income (EBIT) in any given year depends on whether the economy is bad, average, or good. EBIT will be $600,000 when the economy is "bad, $1,200,000 when the economy is "average," and $1,800,000 when the economy is "good." In any given year, the probabilities that the economy is bad, average, or good are 0.25, 0.5, and 0.25, respectively. Assume that capital markets are perfect (no taxes, no bankruptcy, etc.).

a. Under its current all-equity capital structure, what is the firm's expected EPS? Enter your answer without the dollar sign and round your final answer to two decimal places

Expected EPS ___________

$

b. Suppose the firm decides to issue $6 million in perpetual debt and use all the proceeds to repurchase 75,000 shares of equity. The debt would have an annual interest rate of 7%, hence the annual interest payment will be 7% of $6 million. What will the firm's expected EPS be after this restructuring? Enter your answer without the dollar sign and round your final answer to two decimal places

Expected EPS _________

$