I. Discuss the reasons for the popularity of leasing as a source of finance. (10 Marks) II. Paisley Brothers plc, a company producing loud paisley shirts, has net operating income of 2000 and is faced with three options of how to structure its debt and equity: a) To issue no debt and pay shareholders a return of 9%; b) To borrow 5000 at 3% and pay shareholders an increased return of 10% c) To borrow 9000 at 6% and pay a 13% return to shareholders. Required: Assuming no taxation and a 100% payout ratio, determine which financing option maximises the market value of the company. (20 Marks) I. Discuss the reasons for the popularity of leasing as a source of finance. (10 Marks) II. Paisley Brothers plc, a company producing loud paisley shirts, has net operating income of 2000 and is faced with three options of how to structure its debt and equity: a) To issue no debt and pay shareholders a return of 9%; b) To borrow 5000 at 3% and pay shareholders an increased return of 10% c) To borrow 9000 at 6% and pay a 13% return to shareholders. Required: Assuming no taxation and a 100% payout ratio, determine which financing option maximises the market value of the company. (20 Marks)