Create the pro-forma balance sheet and income statement taking into account the proposed change in the capital structure, assuming the tax regime and payout policy (in terms of percentage of net income paid out as dividends) remain unchanged

Case Blaine Kitchenware, Inc.

Blaine Kitchenware, Inc. is an all-equity cash-rich company considering the following change in capital structure: borrow $50 millions at an interest rate of 6.75% use the loan together with $209 millions of its own cash to repurchase 14 millions shares at the current market price of $18.50/share Currently, the (market value) balance sheet and the income statement of Blaine Kitchenware, Inc. are as follows (expressed in $ thousands) : Assets Liabilities Cash $230,866 Debt $0 Other Assets $257,497 Equity $488,363 Total $488,363 Equity $488,363 Revenue $346,366 Less: Cost of Goods Sold $249,794 Gross Prot $96,572 Less: Selling, General & Administrative Expenses $28,512 EBIT $68,060 Earnings Before Tax $68,060 Less: Taxes $23,821 Net Income $44,239 Dividends $28,345