DON'T USE FINANCIAL CALCULATOR

a). The value of two firms X-an unlevered firm and Y-a levered firm with Rs. 600000 debt at the rate of 6% rate of interest as given below. An investor holds Rs. 20000 worth of Y 's shares. Show the process by which he can earn same return at a lesser cost. Equity Capitalization rate for firm X is 11.11%& for firm Y is 10.46%. (12 Marks) b) Give a detailed account on M.M Approach with Tax and without Tax context. Also illustrate the Arbitrage process displayed by M.M? [3+3+6=12Marks]