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Pelabur’s Pizza Mini Case – Capital Structure Decision

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Pelabur’s Pizza Mini Case – Capital Structure Decision
a) Repurchase of stock=RM15x100000shares=RM1500000 Equity after repurchase of stock=repurchase of stock-amount borrowed

|Scenario |Amount borrowed(RM) |Equity after repurchase of stock(RM) |
|1 |0 |1500000-0=1500000 |
|2 |187500 |1500000-187500=1312500 |
|3 |375000 |1125000 |
|4 |562500 |937500 |
|5 |750000 |750000 |
|6 |937500 |562500 |
|7 |1125000 |375000 |

b) Weight of equity=(equity after repurchase of stock/repurchase of stock) x100% Weight of debt + weight of equity=100%

|Scenario |Weight of debt(%) |Weight of equity(%) |
|1 |100-100=0 |1500000/1500000 x100%=100.0 |
|2 |100-87.5=12.5 |1312500/1500000 x100%=87.5 |
|3 |25.0 |75.0 |
|4 |37.5 |62.5 |
|5 |50.0 |50.0 |
|6 |62.5 |37.5
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