I have a group assignment related to california pizza kitchen, which we should read the case written by Elizabeth shumadine, university of virginia, and analyse it and answer the following question: $1.$ What is going on at CPK$?$ What decisions does Susan Collyns face? In what ways can Susan Collyns facilitate the success of CPK$?$

$2.$ Maybe we can all be right. Is there a case for that?

$3.$ Using the scenarios in case Exhibit $9,$ what role does leverage play in affecting the return on equity $($ROE$)$ for CPK$?$ How does debt add value to CPK$?$

$4.$ What about the cost of capital?

$5.$ In assessing the effect of leverage on the cost of capital, you may assume that a firm$$s CAPM beta can be modeled in the following manner: $$L $=$U$[1+(1$ T$)$D$/$E$],$ where $$U is the firm$$s beta without leverage, T is the corporate income tax rate, D is the market value of debt, and E is the market value of equity.

$6.$ Based on the analysis in case Exhibit $9,$ what is the anticipated CPK share price under each scenario?

$7.$ How many shares will CPK be likely to repurchase under each scenario?

$8.$ What role does the tax deductibility of interest play in encouraging debt financing at CPK$?$

$9.$ What is the case for not doing the recapitalization?

$10.$ What should Collyns recommend? What capital structure policy would you recommend for CPK$?$