Often, companies within the same industry have similar capital structures. In this example - the restaurant industry - it's a little more complicated. Such a setting allows us to consider the cost of debt across companies with similarly stable cash flows. Let's see how that is reflected in four restaurant companies: Ruby Tuesday, an American casual restaurant chain; Darden Restaurants, another casual restaurant chain which runs restaurants like Olive Garden and LongHorn Steakhouse; DineEquity, which franchises and operates IHOP and Applebees restaurants; and Yum!, which owns fast food restaurants like KFC and PizzaHut. Here are their debt levels and the market value of their equity. Try and match them with their Cost of Debt. (hint: remember that leverage adds risk)

Ruby Tuesday	Darden Restaurants	DineEquity	Yum!
Debt: $224 million	Debt: $440 million	Debt: $1,400 million	Debt: $3,900 million
Market Value of Equity: $ 184 million	Market Value of Equity: $ 7,960 million	Market Value of Equity: $ 1,420 million	Market Value of Equity: $ 35,360 million

Item Bank

Ruby Tuesdays

DineEquity

Darden Restaurants

Yum!

5.1%

Place Item Here

5.5%

Place Item Here

8.6%

Place Item Here

8.9%

Place Item Here