Star Production Corporation (SPC) is considering a recapitalisation plan that would convert SPC from its current all-equity capital structure to one including some financial leverage. SPC now has 5 million ordinary shares outstanding, which are selling for $40.00 each. Currently, SPC shareholders have a required return of 12.5%. The expected EBIT of SPC is $25,000,000 per year for the foreseeable future. The recapitalisation proposal is to issue $50,000,000 worth of long-term debt at an interest rate of 6.5 per cent and use the proceeds to repurchase as many shares as possible at a price of $40.00 per share. Assume there are no market frictions such as corporate or personal income taxes. Answer the following questions a. Calculate the number of shares outstanding, the per-share price and the debt-to-equity ratio for SPC if the proposed recapitalisation is adopted. (Marks: 3) b. Calculate the expected earnings per share (EPS) and expected return on equity (ROE) for SPC shareholders under the proposed mixed debt/equity capital structure. (Marks: 4) c. Calculate the break-even level of EBIT where earnings per share for SPC shareholders are the same under the current and proposed capital structures. (Marks: 2) d. At what level of EBIT will SPC shareholders earn zero EPS under the current and the proposed capital structures? (Marks: 1) Please show your calculations clearly