You have gathered the following information on Syngenta Plc. The company plans to pay a dividend of 0.755 next year and expects dividends to grow at 1.5%. There are 4 million shares outstanding whilst the debt has a total market value of 10 million. The required return (YTM) on the debt is 8%. The beta of the firms equity is 0.9. The current risk-free rate is 4% per year and the expected annual return on the market portfolio is 18%. There are no taxes. REQUIRED The bonds of Syngenta are currently rated as AA+. Explain what this means and discuss what would happen to the YTM of the bonds if the rating was changed to BBB. (4 marks) e) At a company director meeting the CEO makes the following comment: Increasing the amount of debt in our firms capital structure is likely to increase our costs of debt and equity financing and therefore our WACC as well. Discuss whether you agree or disagree with the CEO by drawing on appropriate capital structure theories.