Question
XYZ expects a net operating income of Rs. 2,00,000. It has 8,00,000, 6% debentures.The overall capitalization rate is 10%. Calculate the value of the firm
XYZ expects a net operating income of Rs. 2,00,000. It has 8,00,000, 6% debentures.The overall capitalization rate is 10%. Calculate the value of the firm and the equitycapitalization rate (Cost of Equity) according to the net operating income approach.If the debentures debt is increased to Rs. 10,00,000. What will be the effect on volumeof the firm and the equity capitalization rate?
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Case Studies in Finance Managing for Corporate Value Creation
Authors: Robert F. Bruner, Kenneth Eades, Michael Schill
7th edition
007786171X, 77861711, 978-0077861711
