River Cruises is all$-$equity$-$financed. $$Current DataNumber of shares

$100,000$Price per share$ $10$Market value of shares$ $1,000,000$ Outcomes$$State of the EconomySlumpNormalBoomProfits before interest$ $81,250$$ $137,500$$ $199,000$ Suppose it now issues $$250,000$ of debt at an interest rate of $10\%$ and uses the proceeds to repurchase $25,000$ shares.

Assume that the firm pays no taxes and that debt finance has no impact on firm value. Refer to the above table to compute the missing data. Note: Do not round intermediate calculations. Round "Earnings per share" to $3$ decimal places. Enter "Return on shares" as a percent rounded to $2$ decimal places.

Outcomes

State of the Economy

Suppose it now issues $$250,000$ of debt at an interest rate of $10\%$ and uses the proceeds to repurchase $25,000$ shares. Assume that

the firm pays no taxes and that debt finance has no impact on firm value. Refer to the above table to compute the missing data.

Note: Do not round intermediate calculations. Round "Earnings per share" to $3$ decimal places. Enter "Return on shares" as a

percent rounded to $2$ decimal places.