You are Susan Chandler, reporting to your boss Blanka Dobrynan. Blanka has charged you with assessing the potential added value to Wrigley as a result of a recap- that is, levering up the firm. Keeping in mind the history of the firm, and the activist stance of your fund, prepare a report for Blanka addressing the following issues: 1. At a broad level what is Blanka Dobrynin hoping to accomplish through her activist-investor strategy? 2. What will be the effects of issuing $3 billion of new debt and using the proceeds either to pay a dividend or to repurchase shares on: a. Wrigley's outstanding shares? b. Wrigley's book value of equity? e. The price per share of Wrigley stock? d. Earnings per share? e. Debt interest coverage ratios and financial flexibility? 3. What is Wrigley's current (pre-recapitalization) weighted- average cost of capital (WACC)? What would you expect to happen to Wrigley's WACC if it issued $3 billion in debt and used the proceeds to pay a dividend or to repurchase shares? 5. Should Blanka Dobrynin try to convince Wrigley's directors to undertake the recapitalization?