1. Should Dubinski recommend a large share repurchase to Blaine’s board? What are the primary advantages and disadvantages of such a move? 
2. Consider the following share repurchase proposal: Blaine will use $209 million of cash from its balance sheet and $50 million in new debt bearing at an interest rate of 6.75% to repurchase 14.0 million shares at a price of $18.50 per share. How would such a buyback change Blaine’s: 
a. Debt ratio? 
b. Interest coverage ratio? 
a. Earnings per share? 
3. Calculate the incremental value to Blaine’s shareholders in terms of interest tax shields from the proposed recapitalization in #2 above. Ignore personal income taxes for your analysis. 
4. As a member of Blaine’s controlling family, would you be in favor of the proposed recapitalization in #2 above? Would you be in favor of it as a non-family shareholder?

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