How does debt add value to CPK?
In many instances, the debt is said to cause negative growth to the business or organizations. This is because of the debts implications that may cause the normal running of the business during the repayment period if the plan to repay it is not well thought of. In spite of these negative implications, there are some positive implications of the debt to the business which wants to grow and go further, and CPK is no exempt. By acquiring the debt, the firm will also benefit during the period of resurfacing it in that the tax implications of the debt differs from the equitable shares this will in turn see a drop of the amount being paid as tax due to lower taxable income. In addition to the above, the firm is currently suffering from the general degeneration of the stock a situation caused by the firm’s undervaluation. This can be remedied by the stock repurchase using the borrowed amounts in order to retain its value without necessarily affecting the value of the stock. This might even translate to increased level of incomes of the stakeholders since the amount used to purchase the stock may change and increase in future when CPK is repaying the debt therefore a positive implication to the business which will see it grow.