4. a) Distinguish between external equity and internal equity. Is equity capital cost free? Justify your answer. (2) 2 b) A firm has net operating income of tk 100,000 and investment of tk 500,000 in assets. Using the NOI approach and an overall capitalization rate of 12 per cent, compute the total value of the firm, value of shares and the cost of equity if the firm has (i) no debt, (ii) tk 300,000 debt, (iii) tk 600,000 debt. Assume at 12 per cent rate of interest on debt and zero tax rate. (3)