Affect a companys real investment policy

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Question: Doncaster Ltd is a utilities company with substantial amount of tangible assets. A director of Doncaster Ltd comments: "Our company should increase the debt-to-equity ratio by issuing new debt rather than equity to fund the project." Do you agree or disagree with the director's view? Explain your reasoning.

"Using debt financing does not affect a company's real investment policy in the real world." Do you agree or disagree with the statement? Explain your reasoning.

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