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A Company Ltd., projected net operating income of Rs. 75,000. It has Rs. 3,00,000, 8% debentures. (a) Calculate the value of the firm according to

A Company Ltd., projected net operating income of Rs. 75,000. It has Rs. 3,00,000, 8% debentures.

(a) Calculate the value of the firm according to 10 net opening income and overall capitalization rate is 10%.

(b) If debenture debt is increased to Rs. 5,00,000. What is the value of the

firm and the equity capitalization rate? (Ans. (a) Rs. 7,50,000, (b) 11.33%, 14%)

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