sunrise, inc., has no debt outstanding and a total market value of $395,000. earnings before interest and taxes, EBIT, and projected to be $53,000 if economic conditions are normal. if there is no strong expansion in the economy, then EBIT will be 13 percent higher If there is a recession, then EBIT will be 22 percent lower. the company is considering a $195,000 debt issue with an interest rate of 8 percent. the proceeds will be used to repurchase shares of stock. there are currently 8,600 shares outstanding. The company has a tax rate of 21 percent, a market-to-book ratio of 1.0, and the stock price remains constant.

A. calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued.

B. calculate the percentage changes in EPS when the economy expands or enters a recession.

C. calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization.

D. given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession.