Kencana Bhd has been listed for the past 15 years at Bursa Malaysia. At present, the company's level of debt to total assets ratio is about 25% with the outstanding debts worth RM80 million. The cost of this debt is 8% per annum. Kencana Bhd expects its earnings before interest and tax (EBIT) t;o be RM40 million every year in perpetuity. Kencana Bhd plans to restructure its capital by issuing new shares to redeem its debt. The management has proposed two options to implement the restructuring planning. Option 1: To issue new shares to redeem all its debt. Option 2: to issue new shares to redeem half of its debt. Assuming that the Modigliani-Miller Model applies and the corporate tax rate is at 24%. Required: Explain briefly possible ways for stockholders to reduce the cost of debt.