Question

assess the value of debt, the time value of money, and how debt can be leveraged to help organizations grow

Answer 1

The value of debt capital in overall capital structure will be helping various organisation to increase their organisational value because debt capital will be offering them with an option to borrow and invest into the business in order to maximize its value and there will be a lower cost of debt attached to business because cost of debt will be having interest tax deduction.

when the return on income is higher than cost of debt, then it will be leading to generation of organisational value and time value of money will be helping the business in compounding the overall return, whereas time value of money will be helping in order to find out such compounding of opportunity that will be helping in compounding the benefits for the organisation in the long run.

Debt can be leveraged to help the organisation grow because there will be an optimal capital structure which can be used by the company to maximize its overall rate of return or company can also use optimum amount of debt capital if the cost of debt is lower than the Return of capital and it will be help in maximizing the rate of return of the company and increasing the organisational value as well.