Question
1. Alpha Ltd is expecting annual earnings before interest and tax of 1.5 Lakhs. The company has 10% debentures of 4 lakhs and
1. Alpha Ltd is expecting annual earnings before interest and tax of ₹ 1.5 Lakhs. The company has 10% debentures of ₹ 4 lakhs and cost of Equity capital is 12%. Calculate the total value of the firm and the overall cost of capital of the firm according to Net Income Approach. Also comment what will happen to the value of the firm and the overall cost of capital if debt is increased in the capital structure. (10 Marks)
The answer should be a min of 800 Words with plagiarism-free.
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Solution Net Income approach was enunciated by Durand it has following assumptions 1flotation cost0 ...
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Corporate Finance and Investment decisions and strategies
Authors: Richard Pike, Bill Neale, Philip Linsley
8th edition
1292064064, 978-1292064161, 1292064161, 978-1292064062
