The government announces that it is heretofore guaranteeing all debt issued by domestic carmakers. The CEO and CFO of a company that qualifies for the debt guarantee program are discussing capital structure. The CFO says, The cost of our debt fell from 8% to 4% in response to the introduction of the debt guarantee program, so the company should issue debt and use the proceeds to repurchase equity. The CEO disagrees, arguing that the cost of debt is irrelevant and that just changing capital structure does not create value. In light of the CEOs argument, does the CFOs argument that the company should recapitalize make sense? In answering this question, assume that there are no taxes and no financial distress costs. Please provide the rationale behind your answer.