How much debt is right

Debt is cheap until it is not. The right amount minimises the cost of capital rather than maximising what a lender will give.

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  How much debt is the right amount: the cost-of-capital approach

  The right amount of debt minimises the blended cost of capital; the maximum a lender will provide is a different and larger number.

  LBO and leveraged finance questions on how much debt a deal can carry, and corporate finance questions on capital structure.

  From Session 18: Optimum Capital Structure — The Cost of Capital Approach · Aswath Damodaran (NYU Stern)