Mopani Ltd. buys, process and freeze dries, Mopani worms for consumption using a variety of industrial packaging techniques. The company has been successful, but, when the company was young, it borrowed heavily at a high rate. It is now considering two capital structures. The two options the company needs to choose from is as follows:

1. Refinance its debt at a lower cost

2. Issue equity and retire its debt

One of the managers of Mopani Ltd. noted that a recent internal report valued the company at a discount of 30% relative to its market price.

Choosing the equity option based primarily on this discount (the difference between the internal valuation and the market price) is an example of which theory?