Question-4. (1 mark)

Find the present value of KTC share which is expected to earn Rs. 10.50 every six months, if money is worth 8% compounded annually.

Question-5. (5 marks)

Cyclone Software Co. is trying to establish its optimal capital structure. Its current capital structure consists of 25% debt and 75% equity; however, the CEO believes that the firm should use more debt. The risk-free rate, R_f, is 5%; the market risk premium, RPM, is 6%; and the firms tax rate is 40%. Currently, Cyclones cost of equity is 14%, which is determined by the CAPM. What would be Cyclones estimated cost of equity if it changed its capital structure to 50% debt and 50% equity? based on cost of equity estimations, Should the firm change its capital structure?

Note: Shouldn't be image or excel form and its must be a proper formulas with step by step.