Question: Please make sure the answers are correct and explain how you got them, thanks! Fujto, Incorporated, has no debt outstanding and a total market value
Fujto, Incorporated, has no debt outstanding and a total market value of $220,000. Earnings before interest and taxes, EBI. are projected to be $36,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 18 percent higher. If there is a recession, then EBIT will be 25 percent lower. The company is considering a $125.000 debt issue with an interest rate of 8 percent The proceeds will be used to repurchase shares of stock. There are currently 11,000 shares outstanding. Ignore taxes for this problem 9-1. Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued. Note: Do not round intermediete calculations and round your answers to 2 decimal places, e.9., 32.16. 0.2. Caiculate the percentage changes in EPS when the economy expands or enters a recession. Note: 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 decimbl places, e.g., 32.16. b-1. Calculate earnings per share, EPS, under each of the three economic scenarios assuming the company goes through with recopitalizotion Note: Do not round intermediate calculations and round your enswers to 2 decimal places, e.9., 32.16. b-2. Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession. Note: A negotive answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal ploces, e.g., 32.16
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