Y Ltd. has an expected Net Operating Profit of `2,40,000. It has `5,00,000, 9% Debt Capital. The
Question:
Y Ltd. has an expected Net Operating Profit of `2,40,000. It has `5,00,000, 9% Debt Capital. The overall capitalisation rate is 12%.
(a) Calculate the value of the firm and Equity Capitalisation rate under NOI approach.
(b) If the firm decides to raise its Debt Capital by an additional `3,00,000 and use such proceeds to buy-back the existing equity shares, then what will be the effect of such a policy on the value of the firm and Equity Capitalisation rate?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answered By
Kirti Kaushal
Having experience of more than 10 years is good enough to coach my students. Currently, I am working as an active supervisor of ACCA students. In my career, I helped students in financial accounting, management accounting, cost accounting, financial reporting, taxation, and audit. I also helped students publish their articles or papers in good journals. I also helped students with thesis and objective writing.
1+ Reviews
10+ Question Solved
Related Book For 
Financial Management
ISBN: 9789352605606
1st Edition
Authors: Swapan Sarkar, Bappaditya Biswas, Samyabrata Das, Ashish Kumar Sana
Question Posted:
