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**Chosen companies are Home Depot and Lowes** Mechanics of Moving to the Optimal a. If your firms actual debt ratio is different from its recommended

**Chosen companies are Home Depot and Lowes**

  1. Mechanics of Moving to the Optimal

a. If your firms actual debt ratio is different from its recommended debt ratio, how should they get from the actual to the optimal? In particular,

  1. should they do it gradually over time or should they do it right now?

  2. should they alter their existing mix (by buying back stock or retiring debt) or

    should they take new projects with debt or equity?

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