3. A firm expects an annual income of `12,00,000. It has `50,00,000, 8% debentures. The Equity Capitalisation

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● 3. A firm expects an annual income of `12,00,000. It has `50,00,000, 8% debentures. The Equity Capitalisation rate is 10%. Calculate the value of the firm and overall Cost of Capital isation according to NI approach.

What will be the value of the firm and the overall capitalisation rate, if the firm is assumed to have employed a debt of `70,00,000 instead of `50,00,000? The rate of interest on debt would be the same as before.

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