#!# 2. Suppose that a firm has no debt in its capital structure. It has an expected annual net operating income of *100,000 and the equity capitalisation rate, k, of 10 per cent. Let us assume that the firm changes its capital structure replacing equity by debt of 300,000 at 7 per cent interest rate. Assuming net income approach, what is the firm's weighted average cost of capital? What is its value?