Use the Harvard Business Brief Case, Blaine Kitchenware, Inc.: Capital Structure by Timothy Luehrman and Joel Heilprin.

1) Do you believe Blaines current capital structure appropriate? Why or why not (Hint: Compare and contrast the capital structure policy of the company to its competitors)

2) Should Dubinski recommend a large share repurchase to Blaines board?

3) Consider the following share repurchase proposal: Blaine uses $209 million of cash from its balance sheet and $50 million in new debt bearing the interest rate of 6.75% to repurchase $14 million shares at a price of $18.50 per share. (Assume Market risk premium is 5.5%) (Hint: Use Cost of capital approach to estimate if the repurchase is worthwhile)

4) As a member of Blaines controlling family, would you be in favor of this proposal?