Tisa Ltd and Gisa Ltd are similar except that Kisa is an unlevered firm. Gisa had Rs. 2,500,000 of 6% debentures outstanding. Tax rate is 30% and Net Operating Income (NOI) is Rs. 500,000 and the cost of equity is 10%. Assume that you hold 10% of Gisa Ltd and show how you will be able to maximize the return while minimizing the outlay?

Answer rating: 100% (QA)

Answer Gisa is a levered firm Interests on bonds Bond value x Coupon rate 2500000 x 6 150000 Net ope... View the full answer