**Instructions for Calculating ROE:**c-1. **Calculate Return on Equity (ROE)** for each of the three economic scenarios before any debt is issued. **Do not round intermediate calculations.** Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16%).c-2. **Calculate Percentage Changes in ROE** when the economy expands or enters a recession. A negative answer should be indicated by a minus sign. **Do not round intermediate calculations.** Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16%).c-3. **Calculate ROE** under each of the three economic scenarios assuming the firm goes through with the recapitalization. **Do not round intermediate calculations.** Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16%).c-4. **Calculate Percentage Changes in ROE** with recapitalization when the economy expands or enters a recession. A negative answer should be indicated by a minus sign. **Do not round intermediate calculations.** Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16%).**Data Table:**- c-1. Recession ROE: _____ %- c-1. Normal ROE: _____ %- c-1. Expansion ROE: _____ %- c-2. Recession Percentage Change in ROE: _____ %- c-2. Expansion Percentage Change in ROE: _____ %- c-3. Recession ROE: _____ %- c-3. Normal ROE: _____ %- c-3. Expansion ROE: _____ %- c-4. Recession Percentage Change in ROE: _____ %- c-4. Expansion Percentage Change in ROE: _____ % Ensure all calculations adhere to the specified guidelines and rounding rules. **Fujita, Incorporated Financial Analysis Exercise**Fujita, Incorporated, is a company currently with no debt and a total market value of $450,000. The earnings before interest and taxes (EBIT) are projected at $57,000 under normal economic conditions. In scenarios of strong economic expansion, the EBIT is expected to be 16% higher, while during a recession, the EBIT will likely be 24% lower.**Debt Proposal:**The company is considering issuing $215,000 of debt at an 8% interest rate. The proceeds will be used to repurchase shares. Currently, there are 9,000 shares outstanding. For this exercise, assume a market-to-book ratio of 1.0, a constant stock price, and disregard taxes for parts (a) and (b).**Questions:****a-1. ROE under Different Economic Scenarios (Prior to Debt Issue):**Calculate the Return on Equity (ROE) for recession, normal, and expansion scenarios. Provide your answers as percentages, rounded to two decimal places.**a-2. Percentage Changes in ROE (Economic Fluctuations):**Calculate the percentage changes in ROE when the economy transitions between different states. Indicate negative changes with a minus sign.**b-1. ROE under Different Economic Scenarios (Post-Debt Issue):**Assuming the firm proceeds with the debt issuance and recapitalization, calculate the ROE for each economic scenario. Provide percentages rounded to two decimal places.**b-2. Percentage Changes in ROE (Economic Fluctuations Post-Recapitalization):**Calculate the percentage changes in ROE for economic expansions and recessions after the debt issue and recapitalization. Use a minus sign for negative changes.**Assumption:**The firm has a tax rate of 25%.**Table for Answers:**Fill in the table provided with the calculated ROEs and percentage changes for both scenarios (pre and post-debt issuance and recapitalization).Note: Detailed calculations and intermediate steps are crucial for understanding the changes in financial metrics due to economic fluctuations and recapitalization activities.

Return on equity (ROE) is the measure of a company's net income divided by its shareholders' equity. ROE is a gauge of a corporation's profitability and how efficiently it generates those profits. The higher the ROE, the better a company is at converting its equity financing into profits.