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as per Q2) Ahan and co. has earning before interest and taxes of 24.00.000. The firm currently has outstanding debt of 215,00,000 at an

 

as per Q2) Ahan and co. has earning before interest and taxes of 24.00.000. The firm currently has outstanding debt of 215,00,000 at an average cost, Kd of 10%. Its cost of equity capital ke. is estimated to be 16%. Determine the current value of firm using the traditional value valuation approach. Determine the firm's overall capitalization rate .Ko The firm is consideration to issue capital of * 5,00.000 in order to redeem 25.00.000 debt .The cost of debt is expected to be unaffected .However, the firm's cost of equity capital is to be reduced to 14% as a result of decrease in leverage .Would you recommend the proposed action i) ii)

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