A company$$s expected annual net operating income $($EBIT$)$ is sh$.50,000.$ The company has Sh $200,000,10\%$ debentures. The equity capitalization rate $($ke$)$ of the company is $12\mathrm{.}5$ per cent.

a$)$ Calculate the overall cost of capital

b$)$ Calculate the value of the firm using the Net operating income approach