Create | Microsoft X w Document26.doc x Customers Area X D2L McGraw Hill Conn X Question 1 - Weel X My Citation list 3/ X Homework Help - X W Order 38931230E x + C ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fnewconnect.mheducation.com%252F#/... Q u * I Update : D2L Homepage - APEI Week 6 Problems i Saved Help Save & Exit Submit Check my work Fowler, Inc., has no debt outstanding and a total market value of $250,000. Earnings before interest and taxes, EBIT, are projected to be $42,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 18 percent higher. 20 If there is a recession, then EBIT will be 30 percent lower. The firm is considering a debt points ssue of $100,000 with an interest rate of 8 percent. The proceeds will be used to repurchase shares of stock. There are currently 10,000 shares outstanding. The firm has a tax rate 24 percent. Assume the stock price is constant under all scenarios. a-1. Calculate earnings per share (EPS) under each of the three economic scenarios Book before any debt is issued. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) a-2. Calculate the percentage changes in EPS when the economy expands or enters a Print recession. (A negative answer should be indicated by a minus sign. Do not round ntermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) References 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, e.g., 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 as a percent rounded to 2 decimal places, e.g., 32.16.) a-1. Recession EPS Normal EPS 3.19 Expansion EPS 3.77 a-2. Recession % Expansion 18.10 % b-1. Recession EPS Normal EPS Expansion EPS b-2. Recession % Expansion % Mc