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Case 32 California Pizza Kitchen Summarize the company history and the case briefly. Using the scenarios in case Exhibit 9, what role does leverage play
Case 32 California Pizza Kitchen
- Summarize the company history and the case briefly.
- Using the scenarios in case Exhibit 9, what role does leverage play in affecting the return on equity (ROE) for CPK? What about the cost of capital?
- Based on the analysis in case Exhibit 9, what is the anticipated CPK share price under each scenario? How many shares will CPK be likely to repurchase under each scenario? What role does the tax deductibility of interest play in encouraging debt financing at CPK?
- What capital structure policy would you recommend for CPK?
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