QUESTION 6 (a) ABC & Co expects a net income of $80,000. It has 8% Debentures worth $ 2,000,000. The equity capitalisation rate of the company is 10%. (i) Calculate the value of the firm and overall cost of capital according to the Net Income approach. (Ignoring income tax) (ii) If Debenture debt is increased to $ 3,000, 000 what shall be the value of firm and the overall cost of capital? (12 marks) .(b) SLM Ltd expects a net operating income of $ 2,000,000. It has 6% Debentures worth $10,00,000. The overall capitalisation rate is 10%. (i) Calculate the value of the firm and the equity capitalisation rate according to NOI approach. (ii) If the debenture debt is decreased to $ 7,500,000 what will be effect on the value of the firm and the equity capitalisation rate ? (13 marks) (Total: 25 marks)