1 Problem 16-1 EBIT and Leverage (L01) points Fujita. Incorporated, has no debt outstanding and a total market value of $150,000 Earnings before interest and taxes. EBIT, are projected to be $28.000 of economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 20 percent higher if there is a recession, then EBIT will be 25 percent lower. The company is considering a 560,000 debt issue with an interest rate of 7 percent. The proceeds will be used to repurchase shares of stock. There are currently 10,000 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) 1-2. Calculate the percentage changes in EPS when the economy expands or enters a recession (A negative answer should be indicated by a minue signDo not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e9.. 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, eg. 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 a minus sign. Do not round Intermediate calculations and enter your answers os a percent rounded to 2 decimal places, 9.. 32.16.) Answer is complete but not entirely correct. -1. Recension EPS 210 1. Normal EPS $ 230 a-1. Expansion EPS 5 3.36 2. Recension percentage change in EPS -2500 12. Expansion percentage change in EPS 2000$ b.1. Recession EPS 2800 b.1. Normal EPS $ 490 1.2. Expansion EPS 5 397 6.2. Recession percentage change in EPS 29.47 b.2. Expansion percentage change in EPS 23.43 $