Minion, Inc., has no debt outstanding and a total market value of $356,900. Earnings before interest...

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Minion, Inc., has no debt outstanding and a total market valueof $356,900. Earnings before interest and taxes, EBIT, areprojected to be $50,000 if economic conditions are normal. If thereis strong expansion in the economy, then EBIT will be 16 percenthigher. If there is a recession, then EBIT will be 25 percentlower. The company is considering a $180,000 debt issue with aninterest rate of 5 percent. The proceeds will be used to repurchaseshares of stock. There are currently 8,300 shares outstanding.Ignore taxes for questions a) and b). Assume the company has amarket-to-book ratio of 1.0 and the stock price remainsconstant.
a-1. Calculate return on equity, ROE, under each of the threeeconomic scenarios before any debt is issued. (Do not roundintermediate calculations and enter your answers as a percentrounded to 2 decimal places, e.g., 32.16.)
a-2. Calculate the percentage changes in ROE when the economyexpands or enters a recession. (A negative answer should beindicated by a minus sign. Do not round intermediate calculationsand enter your answers as a percent rounded to 2 decimal places,e.g., 32.16.)
b-1. Assume the firm goes through with the proposedrecapitalization. Calculate the return on equity, ROE, under eachof the three economic scenarios. (Do not round intermediatecalculations and enter your answers as a percent rounded to 2decimal places, e.g., 32.16.)
b-2. Assume the firm goes through with the proposedrecapitalization. Calculate the percentage changes in ROE when theeconomy expands or enters a recession. (A negative answer should beindicated by a minus sign. Do not round intermediate calculationsand enter your answers as a percent rounded to 2 decimal places,e.g., 32.16.) Assume the firm has a tax rate of 23 percent.
c-1. Calculate return on equity (ROE) under each of the threeeconomic scenarios before any debt is issued. (Do not roundintermediate calculations and enter your answers as a percentrounded to 2 decimal places, e.g., 32.16.)
c-2. Calculate the percentage changes in ROE when the economyexpands or enters a recession. (A negative answer should beindicated by a minus sign. Do not round intermediate calculationsand enter your answers as a percent rounded to 2 decimal places,e.g., 32.16.)
c-3. Calculate the return on equity (ROE) under each of thethree economic scenarios assuming the firm goes through with therecapitalization. (Do not round intermediate calculations and enteryour answers as a percent rounded to 2 decimal places, e.g.,32.16.)
c-4. Given the recapitalization, calculate the percentagechanges in ROE when the economy expands or enters a recession. (Anegative answer should be indicated by a minus sign. Do not roundintermediate calculations and enter your answers as a percentrounded to 2 decimal places, e.g., 32.16.)

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Minion, Inc., has no debt outstanding and a total market valueof $356,900. Earnings before interest and taxes, EBIT, areprojected to be $50,000 if economic conditions are normal. If thereis strong expansion in the economy, then EBIT will be 16 percenthigher. If there is a recession, then EBIT will be 25 percentlower. The company is considering a $180,000 debt issue with aninterest rate of 5 percent. The proceeds will be used to repurchaseshares of stock. There are currently 8,300 shares outstanding.Ignore taxes for questions a) and b). Assume the company has amarket-to-book ratio of 1.0 and the stock price remainsconstant.a-1. Calculate return on equity, ROE, under each of the threeeconomic scenarios before any debt is issued. (Do not roundintermediate calculations and enter your answers as a percentrounded to 2 decimal places, e.g., 32.16.)a-2. Calculate the percentage changes in ROE when the economyexpands or enters a recession. (A negative answer should beindicated by a minus sign. Do not round intermediate calculationsand enter your answers as a percent rounded to 2 decimal places,e.g., 32.16.)b-1. Assume the firm goes through with the proposedrecapitalization. Calculate the return on equity, ROE, under eachof the three economic scenarios. (Do not round intermediatecalculations and enter your answers as a percent rounded to 2decimal places, e.g., 32.16.)b-2. Assume the firm goes through with the proposedrecapitalization. Calculate the percentage changes in ROE when theeconomy expands or enters a recession. (A negative answer should beindicated by a minus sign. Do not round intermediate calculationsand enter your answers as a percent rounded to 2 decimal places,e.g., 32.16.) Assume the firm has a tax rate of 23 percent.c-1. Calculate return on equity (ROE) under each of the threeeconomic scenarios before any debt is issued. (Do not roundintermediate calculations and enter your answers as a percentrounded to 2 decimal places, e.g., 32.16.)c-2. Calculate the percentage changes in ROE when the economyexpands or enters a recession. (A negative answer should beindicated by a minus sign. Do not round intermediate calculationsand enter your answers as a percent rounded to 2 decimal places,e.g., 32.16.)c-3. Calculate the return on equity (ROE) under each of thethree economic scenarios assuming the firm goes through with therecapitalization. (Do not round intermediate calculations and enteryour answers as a percent rounded to 2 decimal places, e.g.,32.16.)c-4. Given the recapitalization, calculate the percentagechanges in ROE when the economy expands or enters a recession. (Anegative answer should be indicated by a minus sign. Do not roundintermediate calculations and enter your answers as a percentrounded to 2 decimal places, e.g., 32.16.)