Bed Bath & Beyond Case Questions: Based on the case, the 80% debt ratio (book value) would result in $1,272,700,000 in debt and a stock repurchase of $1,672,700,000 (assuming that the $400 million of excess cash is also used to repurchase stock). Although we know that we should look at market value of equity, not book value of equity, the case was written to assume a ratio of Debt / (Debt + Book Value of Equity) = 80%. Assume that the $400 million in excess cash was earning the same 4.5% rate at which BBBY could borrow the $1.2727 billion. Case Questions: 1. If BBBY borrows $1,272,700,000, its bond rating will deteriorate. Would BBBY still be able to borrow at 4.5% if its bond rating were "junk"? Use the bond rating ratios table below in conjunction with Exhibit 7A to answer this question. Bond Rating Ratios 40% Proposal 80% Proposal EBIT Interest Coverage 22.5 11.3 EBITDA Interest Coverage 25.5 12.7 Debt-to-Total Capital 40% 80% Funds from Operations / Total Debt 72% 35% 2. What capital structure do you