The Connecticut Computer Company has the selected financial results shown below.

	10% Debt	40% Debt	75% Debt
Debt	$8,000
Equity	72,000
Total Capital	$80,000
Shares@ $5	14,400
EBIT	$14,400
Interest (15%)	1,200
EBT	$13,200
Tax (40%)	5,280
Net Income	$7,920
ROE
EPS

The company is considering a capital restructuring to increase leverage from its present level of 10% of capital.

Calculate Connecticut's ROE and EPS under its current capital structure.

Restate the financial statement line items shown, the number of shares outstanding, ROE, and EPS if Connecticut borrows money and uses it to retire stock until its capital structure is 40% debt assuming EBIT remains unchanged and the stock continues to sell at its book value. (Develop the second column of the chart shown.)

Recalculate the same figures assuming Connecticut continues to restructure until its capital structure is 75% debt. (Develop the third column of the chart.) Round ROE to one decimal place. Round EPS to two decimal places. Enter all amounts as positive numbers.

	10% Debt	40% Debt	75% Debt
Debt	$8,000	$	$
Equity	72,000
Total Capital	$80,000	$	$
Shares@ $5	14,400
EBIT	$14,400
Interest (15%)	1,200
EBT	$13,200	$	$
Tax (40%)	5,280
Net Income	$7,920	$	$
ROE
EPS	$	$	$