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ohn Lee, the CFO of Mpota Limited has just completed a training program on Trade-off...

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Accounting

ohn Lee, the CFO of Mpota Limited has just completed a training program on Trade-off theory on capital structure. John Lee is excited about Trade-off theory and has decided to issue bonds and use the proceeds to buy back shares.

(i) Based on your understanding of Trade-off theory, why do you think Mr Lee has decided to issue bonds and use the proceeds to buy back shares?

(ii) Briefly describe 5 issues Mr Lee should consider before he issues bonds and use the proceeds to buy back shares.

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