Consider the below table. All monetary values are in CAD.

	Current Plan	Proposed Plan
Assets	CAD 5 million	CAD 5 million
Debt	CAD 0	CAD 1500000
Equity	CAD 5 million	CAD 3500000
Debt to Equity Ratio	0	CALCULATE
Net Sales Revenue (Recession)	CAD 350000	CAD 500000
Net Sales Revenue (Expansion)	CAD 580000	CAD 670000
Shares Outstanding	150000	100000
Total Expenses (Recession)	CAD 120000	CAD 280000
Total Expenses (Expansion)	CAD 180000	CAD 310000
Interest Rate	5%	5%

Required:

1) Calculate the Debt to Equity Ratio for the proposed plan.

2) Prepare the current capital structure and the proposed capital structure. Compare between both structures under the 2 given economic situations.

3) What is the variability in ROE and EPS. Explain with numbers.

4) Calculate the breakeven EBIT. Interpret your results.

5) Based on your calculation, why is leveraging essential in financial decisions?

6) Is there risk of financial distress for this company. Explain in details.