ZED Limited is presently financed entirely by equity shares. The current market value is Rs. 6, 00, 000. A dividend of Rs. 1, 20, 000 has just been paid. This level of dividend is expected to be paid indefinitely. The company is thinking of investing in a new project involving an outlay of Rs. 5, 00, 000 now and is expected to generate net cash receipts of Rs. 1, 05, 000 per annum indefinitely. The project would be financed by issuing Rs. 5, 00, 000 debentures at the market interest rate of 18%.