4. Y Ltd. has EBIT of `1,00,000. The company makes use of debt and Equity Capital. The...

Question:

4. Y Ltd. has EBIT of `1,00,000. The company makes use of debt and Equity Capital. The firm has 10% debentures of `5,00,000 and the firm’s Equity Capitalisation rate is 15%.

You are required to compute:

(i) Market value of equity and value of the firm.

(ii) Overall Cost of Capital .

Assume NI approach.

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