Indus Motor Company (IMC) is trying to find the optimal capital structure. Presently, IMC holds 40% debt ratio while it expects to have dividend of Rs. 489 per share next year. IMC assume that these dividends will grow at a constant rate of 5% forever. The investor demand 10.89% return on their investment. The IMC is presenting an alternative capital structure to its Board of Directors which they claim will enhance the value of the firm. The proposed changes require the firm to increase its debt ratio to 50% which will increase the dividend to Rs.524 per share. The increase in debt ratio will cause an increase in the dividend growth rate which is expected to be 6% forever. High debt increases the risk and hence the investors demand higher return of 11.34% on their investments. [POINTS: 10] i) What is the value per share for Indus Motor under the current capital structure? ii) What is the value per share for Indus Motor under the proposed capital structure? iii) Should Indus Motor make the capital structure change? Explain in one line.