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Dear Sir
I agree with the principle that debt reduces the cost of capital in terms of WACC. In todays world a lot of companies are sitting on cash piles due to different market factors. If a company is returning for example 20%, has a cash pile and debt is cheap and even cheaper with tax do they still borrow on assets????
There is no point in borrowing if they do not need the money for anything. The money should either be invested in new assets/new companies, or returned to shareholders either as dividend or by buying back shares. (Buying back shares and cancelling them would in itself increase the gearing)
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