The CFO recommends that the company issue debt to buy back shares, as the company's current leverage is only 10% and he believes increasing leverage will also increase company value. But one board member complained about this strategy, arguing that lending only makes sense if the company invests the money in a positive NPV project. Who is right, the CFO or the board member?

Answer rating: 100% (QA)

Both the CFO and the board member have valid points and the decision ultimately depends on the specific circumstances and objectives of the company Th... View the full answer