Morrison PLC and Monsoon PLC are identical companies operating in the same industry. However, Morrison PLC is an unlevered company, whereas Monsoon PLC is a levered company with 9% bonds with a market value Rs.1 Million. All earnings streams of the two companies are perpetuities. Neither company pays taxes. Both companies maintain a 100% pay-out policy for their common stock holders. The following additional information is also provided Morrison Monsoon (Rs.000) (Rs.000) Projected annual operating income 520 520 Market value of common stock 2,600 1.725 Market value of debt 1,000 Requirements; Assume, an investor wishes to purchase 5% equity stake of each of the companies above, in a way that the initial net cost of the two investments will be the same. The investor can also make any amount of personal borrowings at the market interest rate of 9% p.a. Calculate the annual rupee return that the investor will be able to earn from each of the investments above. ii. Briefly explain, which investment in parti. above is better for the investor? Under what circumstances will your decision change