In a previous post, I discussed the effect of how further debt issuance would benefit Apple’s share price. As additional debt is issued, this works to lower a company’s creditworthiness as default probability increases and comes at the cost of higher interest rates accordingly. Nonetheless, debt is a cheaper source of capital than equity for a company (up to a point), and therefore has the effect of lowering its cost of capital and benefitting the overall value of the enterprise.Excluding the value-add of the debt issuance itself (debt adds to the value of a company, as you’re adding claimholders against the company’s assets), Apple’s enterprise value could increase up to 9% by optimizing its capital structure to somewhere between 30%-35% debt (it’s currently at ~13%). Based on my fair value projections for the company, Apple’s median enterprise value comes to $596 billion. This could be boosted to roughly $645 billion by increasing debt’s proportion in the capital structure to 30%-35% (again, independent of the value added by the debt itself). The key consideration of this exercise is to determine the level by which the company’s WACC is minimized, displayed by the graph below:As the graphs illustrate, under-leveraging is much more beneficial than over-leveraging. Staying slightly to the left of the optimum point on these graphs gives some level of leeway in the event of a market decline in the price of the company's equity (i.e., in effect putting it closer to the minimum point on the graph). At its current level, Apple could safely issue debt up to 30% of its capital structure without affecting its creditworthiness, while at the same time increasing the value of its equity and overall company value.