Case | 2009

Blaine Kitchenware, Inc.: Capital Structure: Brief Case No. 4040.

by Timothy A. Luehrman and Joel L. Heilprin

Abstract

A diversified mid-sized manufacturer of kitchen tools contemplates a stock repurchase in response to an unsolicited takeover. The company must analyze its debt capacity and optimal capital structure,while considering associated changes in firm value and stock price. The case is designed to teach Miller-Modigliani conditions, M-M Proposition 1, and the static-tradeoff model of optimal capital structure involving interest tax shields and costs of financial distress.

Keywords: Capital Structure; Financial Strategy; Interest Rates; Taxation; Stocks; Consumer Products Industry;

Citation:

Luehrman, Timothy A., and Joel L. Heilprin. "Blaine Kitchenware, Inc.: Capital Structure: Brief Case No. 4040." Harvard Business Publishing Case, 2009.