Operating income 50000, cost of debt 10% and outstanding debt 2,00,000. If the overall capitalisation rate is

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Operating income 50000, cost of debt 10% and outstanding debt 2,00,000. If the overall capitalisation rate is 12.5%,

i) calculate the total value of the firm and the equity capitalisation rate.

ii) Evaluate the outcome if debt increases to 3,00,000 to repurchase equity share.

Related Book For answer-question

Valuation The Art and Science of Corporate Investment Decisions

ISBN: 978-0133479522

3rd edition

Authors: Sheridan Titman, John D. Martin

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Posted Date: Feb 07, 2024 07:13 AM

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Operating income 50000, cost of debt 10% and outstanding debt 2,00,000. If the overall capitalisation rate is

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i To calculate the total value of the firm and the equity capitalisation rate we can use the net income approach According to this approach the total ... View the full answer

Valuation The Art and Science of Corporate Investment Decisions

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