Problem
This is a CAPITAL STRUCTURE challenge - should the company incur debt or not? Why or why not?
If so, how much debt should it incur?
How does one convince the CEO that it is in the company's best interests to take on some debt?
This case was selected to:
• To create an awareness of alternative capital structures on financial performance, and how to value the benefits created by debt finance.
• To illustrate capital structure theory and how to select a target debt-to-capital ratio.
• To consider the effect of corporate culture and managerial philosophy on the capital structure decisions, and how to convince management to change to a more optimal level of debt finance.
The response should include a reference list. Using one-inch margins, Times New Roman 12 pnt font, double-space and APA style of writing and citations.