Within the same sector, some firms have a higher debt-to-equity ratio than others. In some cases, it is by choice whereas in other cases it is not it resulted from some recent unfavourable market developments which led the firm to a higher (above average) debt-toequity ratio. Suppose that you started a new job as the CEO of a listed firm operating in the real estate sector in the UK, with annual revenues of 120 million, and noticed that its debt-toequity ratio is 10% higher than the average, for the sector. In addition, you noticed that there are currently plans to borrow in the very near future an additional 10 million through the issuance of new bonds, which will increase the firms debt-to-equity ratio to 20% above the average for the sector. After discussing the above issues with your new staff members (economists, accountants, engineers, architectures, sales team, etc.), you noticed that the 10 million additional borrowing will be used to start the construction of two new very modern buildings, one in Birmingham and another in Manchester. You were very happy to see the enthusiasm of your new team but, at the same time, you feel that, if the sales of those new buildings are not those that are expected, the firm will eventually enter into financial distress or even bankruptcy. Considering the above information and the current economic context in the UK, what would you do? Do you go ahead with the construction of the new buildings? Do you delay these investments? Do you try to reduce debt instead of going ahead with the investment? If so, how? Explain the economic rationale underlying your choices as if you were justifying them to your key employees and the firms shareholders.