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CFO is proposing that her company issues equity to reduce debt, because the company's current...

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Accounting

CFO is proposing that her company issues equity to reduce debt, because the company's current leverage ratio is 45% and the CFO believes that lower leverage will increase company value. The company's credit rating is BB. But a board member complained about this strategy, arguing that issuing equity will increase the number of shares outstanding and create dilution. 1) Who is right, the CFO or the board member? 2) Discuss.

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