Business, 18.12.2019 06:31 FombafTejanjr3923

Ghost, inc., has no debt outstanding and a total market value of $220,100. earnings before interest and taxes, ebit, are projected to be $38,000 if economic conditions are normal. if there is strong expansion in the economy, then ebit will be 12 percent higher. if there is a recession, then ebit will be 23 percent lower. the company is considering a $120,000 debt issue with an interest rate of 5 percent. the proceeds will be used to repurchase shares of stock. there are currently 7,100 shares outstanding. the company has a tax rate of 21 percent, a market-to-book ratio of 1.0, and the stock price remains constant. a-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.)a-2. 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.)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.)

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Ghost, inc., has no debt outstanding and a total market value of $220,100. earnings before interest...

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