process must be identified before financial risk can be analyzed. Assume that the decision is made to adopt production plan A. a. Based on the estimated relationships between financial leverage and capital costs (listed in Table 2), determine the amount of debt that will maximize the value of the company. (Because the company is valued through a perpetual cash flow, the value of equity is based on the after-tax income adjusted by the cost of equity. The value of the company is based on the value of equity plus the value of debt.)