DRAFT A REPLY TO THE BELOW POST WITH REFERENCES (APA STYLE)

Dear All,

1. Does the companys debt policy create value to the firm?

After calculation, the company will gain maximum benefit from the debt policy by having the debt at 30%. With 30% of debt, the WACC is at 7.40% which is the lowest when compared to the other portion of debt as stated in the table above. The debt policy has provided the benefit to the firm as it helps lowering the cost of funds.

2. Does the companys debt policy create competitive advantage?

Yes, debt policy enhances competitiveness. When a business benefits from it, it may use the margin generated by debt policy to expand its capacity or market the business in order to generate new business. When a business generates more revenue, its value improves. If the corporation chooses to keep the current level, it retains the lower-cost fund.

3. Does the companys debt policy sustain senior managements visions?

As the corporation intends to implement the debt policy, the policy will vest top management with ownership. Previously, management controlled just 50% of the whole equity. The new debt policy will climb to 80%, which will foster a sense of ownership and responsibility to management. Additionally, the company's stock will appreciate in tandem with the management's ambition. Due to the fact that a debt policy boosts the value of stocks.