In 2022, Costco Wholesale Corporation had a market capitalization of ($238) billion, debt of ($6.5) billion, cash

Question:

In 2022, Costco Wholesale Corporation had a market capitalization of $$238$ billion, debt of $$6.5$ billion, cash of $$12$ billion, and EBIT of about $$8$ billion. If Costco were to increase its debt by $$1$ billion and use the cash for a share repurchase, which market imperfections would be most relevant for understanding the consequence for Costco’s value? Why?

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