In 2022, Costco Wholesale Corporation had a market capitalization of $238 billion, debt of $6.5 billion, cash
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In 2022, Costco Wholesale Corporation had a market capitalization of $238 billion, debt of
$6.5 billion, cash of $12 billion, and EBIT of about $8 billion. If Costco were to increase its debt by $1 billion and use the cash for a share repurchase, which market imperfections would be most relevant for understanding the consequence for Costco’s value? Why?
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