Bahubali Ltd's expected annual net operating income is Rs. 100,000. The company has: 4000, 8% Debentures of Rs. 100 each, 4800 equity shares of Rs. 100 each and Equity capitalization rate is 10.50%. 1. Calculate the overall cost of capital and the value of the firm using Net Income Approach. 2. Comment on the cost of capital and value of the firm as per Net Income Approach when Bahubali Ltd reduces the amount of Debentures and a fresh issue of equity shares is made to redeem the debentures. Assume no taxes. (1 Mark for comment)