Firm: American Airlines Inc Having carefully evaluated the firm's business and financial risks, you are now in a good position to examine how much debt can or should your firm have. Based on theory. adding more debt is likely to enhance firm value UP TO A POINT. That point being increasing debt without jeopardizing or threatening the survival or the credit worthiness of the firm. How do we evaluate that? Here are some things to help do that: 1. Credit rating of the firm or of its outstanding bonds 2. Level of Beta for your firm relative to other competitor firms 3. Check bond ratings vs level of debt utilized at comparable firms 4. Amount of debt relative to industry leverage ratio. Thank you :)