Question 6 In Exhibit CPK Case 327. shown below me that CPK changes from the present 15% Debt/Capital m Obtain the new Book values of Debt and Equity at 15% Debt / Cat 00 If it is announced that the new book value of debt issue is going to be used to repurchase sockswhat would be the stock? How many stocks can be repurchased at this new price using the debate Exhibit 9 CALIFORNIA PIZZA KITCHEN Pro Forma Tax Shield Effect of Recapitalization Scenarios (Dollars in thousands, except share data; figures based on end of June 2007) Debt/Total Capital Detta Act 10 20 Interest rate Tax rate 6.168 6.16% 6.16% 32.5% 32.5% 32.5% Earnings before income taxes and interest23 Interest expense 30,054 30.054 30.054 Earnings before taxes 1.391 2.783 30,054 Income taxes 28,663 27,271 2.755 Net income 2.303 8.852 20.299 19.352 18.419 Book value: Debt Book values Debt Equity Total capital 22,569 45.176 225.088 203.292 180.210 225.888 225.888 225.BBB Market value: Debt(3) Equity (4) 22.589 45,178 Market value of capital 643.773 628.516 613 259 643.773 651.105 658.437 Interest rate of CPK's credit facility with Bank of America UIBOR 0.80% EBIT includes interest income. Market values of debt equal book values. 19 Actual market values of equity equals the share price ($22.10) multiplied by the current number of shares outstanding (29.13 million). Source: Case writer analysis based on CPK financial data. Edit Format Table 12pt Paragraph BI YA > Question 6 In Exhibit CPK Case 327. shown below me that CPK changes from the present 15% Debt/Capital m Obtain the new Book values of Debt and Equity at 15% Debt / Cat 00 If it is announced that the new book value of debt issue is going to be used to repurchase sockswhat would be the stock? How many stocks can be repurchased at this new price using the debate Exhibit 9 CALIFORNIA PIZZA KITCHEN Pro Forma Tax Shield Effect of Recapitalization Scenarios (Dollars in thousands, except share data; figures based on end of June 2007) Debt/Total Capital Detta Act 10 20 Interest rate Tax rate 6.168 6.16% 6.16% 32.5% 32.5% 32.5% Earnings before income taxes and interest23 Interest expense 30,054 30.054 30.054 Earnings before taxes 1.391 2.783 30,054 Income taxes 28,663 27,271 2.755 Net income 2.303 8.852 20.299 19.352 18.419 Book value: Debt Book values Debt Equity Total capital 22,569 45.176 225.088 203.292 180.210 225.888 225.888 225.BBB Market value: Debt(3) Equity (4) 22.589 45,178 Market value of capital 643.773 628.516 613 259 643.773 651.105 658.437 Interest rate of CPK's credit facility with Bank of America UIBOR 0.80% EBIT includes interest income. Market values of debt equal book values. 19 Actual market values of equity equals the share price ($22.10) multiplied by the current number of shares outstanding (29.13 million). Source: Case writer analysis based on CPK financial data. Edit Format Table 12pt Paragraph BI YA >
