$1.$ What is the problem at hand?

$2.$ Does BBBY$$s historical capital structure seem the most effective one for the future as well?

$3.$ How do BBBY$$s WACC and EPS change in each of the following scenarios:

a$.$ Current $($zero debt$)$

b$.40\%$ Debt to Total Capital

c$.80\%$ Debt to Total Capital

$4.$ Should BBBY consider adding debt to its balance sheet? If yes, by how much?

$*$ Assume that BBBY$$s current cost of capital is $9\mathrm{.}13\%.$

$*$ Assume that share repurchases will not affect the per share stock price $($i$.$e$.,$ $$37/$share$).$

$*$ Note that the $$Debt to Total Capital$$ ratios were computed based on $$book values$$ of debt and

equity, instead of $$market values$.$ However, for simplicity, you can use these ratios as the $$debt

weight$$ in the WACC equation $($i$.$e$.,$ D$/($E$+$D$)$ of $40\%$ and $80\%,$ respectively. Corresponding D$/$E

ratios are $66\mathrm{.}7\%$ and $400\%,$ respectively.$)$