A companys current capital structure is made up of long-term debt, preference shares and ordinary shares, in the respective proportions of 20:30:50. The interest charged on the long-term debt is 10%. The preference shareholders demand a return of 12% on their investment. The ordinary shareholders have a required return of 18%.

1.3 Should the company look at the option of increasing the amount of debt that it carries? In brief point form, explain why, or why not.