34 Belinda Fine Foods Ltd is a successful medium-sized firm with total assets of $3 200 000. Due to the conservative nature of the managing director, who owns 51% of the issued capital, the firm is financed with 90% equity and 10% debt. The profits and cash flows of the firm are consistent and highly predictable. Could the firm’s shareholders benefit from an increase in the proportion of debt in the firm’s capital structure? Explain why.