This is a group assignment. Each group is required to submit a maximum two-page (not including exhibits) report in pdf format by 11:00 pm on Tuesday, April 7th. Please submit your assignments through SUCourse (use the Assignments link on the left pane). Late, e-mail or submissions in hard copy are not accepted. One submission from each group is enough.

Cases will be graded on the quality of analysis and the clarity. Crucial assumptions in your analysis should be clearly stated in your reports. Please upload your excel files with your report to SUCourse.

Download links for the case and additional reading materials are listed below.

M&M Pizza

https://hbsp.harvard.edu/tu/17532a6c https://hbsp.harvard.edu/tu/afb5cafc

Finance Reading: Capital Structure Theory

https://hbsp.harvard.edu/tu/d49b504d

In this assignment, we will develop an understanding of the Modigliani-Miller propositions, that we discussed in our last lectures, on optimal capital structure. We will focus on the tax shields and the trade-off between gains and costs of leverage.

I urgently need answers to these questions. I will be very happy if you help. In addition, if you send excel files, it would great. :)

Your case report should include answers to those questions given below, but please feel free to discuss any other important aspect of the case. 1. How do the financial statements for M&M Pizza vary with the proposed repurchase plan? Do the alternative policies improve the expected dividends per share? 2. What impact does the repurchase plan have on M&M's weighted-average cost of capital? 3. What are the debt and equity claims worth the alternative scenarios? You may note that the present value of a perpetual cash flow stream is equal to the expected payment divided by the associated required return. 4. Which proposal is best for investors? What do you recommend that Miller do? 5. How would your analysis in questions 2 and 3 and recommendation in questions 4 change if the new tax law is implemented? Please note that, with corporate taxes, the expected debt-to- equity ratio under the share repurchase plan is 0.588, and the number of remaining shares outstanding is 39.4 million. Your case report should include answers to those questions given below, but please feel free to discuss any other important aspect of the case. 1. How do the financial statements for M&M Pizza vary with the proposed repurchase plan? Do the alternative policies improve the expected dividends per share? 2. What impact does the repurchase plan have on M&M's weighted-average cost of capital? 3. What are the debt and equity claims worth the alternative scenarios? You may note that the present value of a perpetual cash flow stream is equal to the expected payment divided by the associated required return. 4. Which proposal is best for investors? What do you recommend that Miller do? 5. How would your analysis in questions 2 and 3 and recommendation in questions 4 change if the new tax law is implemented? Please note that, with corporate taxes, the expected debt-to- equity ratio under the share repurchase plan is 0.588, and the number of remaining shares outstanding is 39.4 million