What is your suggested premium above the current stock price

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Reference no: EM133494956

Case Study: The focus of this case(done in group)is to understand how leverage will effect beta,the impact of different levels of debt on the WACC, and the impact of a share repurchase on earnings pershare and stock price. In the end you are providing a recommendation to Blaine insiders to helpthem make an informed decision on a stock repurchase proposal so as to reach an optimal capitalstructure.

Analysis/Questions:

1. Prepare four stock repurchase scenarios using a mix of cash on hand and new debt.

2. What is your suggested premium above the current stock price for each of the scenarios and what is your reasoning for the selected premiums?

3. Determine the appropriate cost of debt for each scenario.

4. What does your analysis on WACC imply about Blaine's optimal capital structure?

5. What does your analysis on post-repurchase share price indicate?

6. What would you recommend in your stock repurchase proposal to Blaine Kitchenware?

 

Reference no: EM133494956

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