KYU Ltd has an Net Operating Income of Rs. 5,00,000, cost of debt 12%, the total value of debt Rs. 10,00,000 and the Cost of Capital (WACC) is 12%. What is value of the firm and the cost of equity capital. Also verify whether the cost of Capital (WACC) is correct? Assume that the leverage increases from Rs. 10,00,000 to Rs. 11,00,000 in the firm's capital structure. The firm also uses the proceeds to re-purchase its equity stock so that the market value of the firm remains the same. Prove that effect of change in capital structure does not affect the WACC