13 Capital Structure Decisions During the last few years, many companies have suffered major trading losses because of the poor economic climate. Assume your firm has found itself in this situation and is considering a major redevelopment investment to exploit nascent growth opportunities. Due to the large losses incurred in recent years, your firm has significant tax loss carry-forwards, which means that it does not need to pay any tax for three years. Should you use debt or equity to finance the firm’s redevelopment investment? Explain your choice.