Question Four North Company and South Company are identical in every respect except Company is not financially levered, whereas the South Comp bonds outstanding. There are no taxes and capital markets are assumed to b any has $2million in 12 percent e perfect. The to earmings of both companies fare not expected to grow and all carnings a sharcholders in the form of dividends The following additional information for the two companies is provided: Net Operating Income Equity Capitalization rate North $600,000 South $600,000 16% I 5% ) Required; (e) For each company, calculate: (i) The firm's total value (i) The firm's overall capitalizatiom rate [1&marks] (amarks (b) Assume you own $22,500 worth of South Company Stock. (i) Show the process.and the amount by which you could reduce your outlay through the [5 marks [2 marks] use of arbitrage (ii) When will this arbitrage process cease