Question 6

The management of Vibgyor Fabrics subscribes to the NOI approach and believes that its cost of debt and overall cost of capital will remain at 9% and 12% respectively. If the debt-equity ratio is 0.8, what is the cost of equity?

Question 8

Mahima Limited has a Net operating income of Tzs 30 million. Mahima employs Tzs 100 million of debt carrying 10% interest charge. The equity capitalization rate applicable to Mahima is 15%. What is the market value of Mahima under net income method? Assume there is no tax.

Question 10

Based on MM with taxes and without taxes, how much time should a financial manager spend analyzing the capital structure of his firm? What if the analysis is based on the static traditional theory?