Ni approach and an equity capitalisation rate, Finance Basics

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Ni approach and an equity capitalisation rate

ABC Ltd. has a net operating income of Rs. 2,00,000 on investment of Rs. 10,00,000 in assets. It can raise debt at a 16% rate of interest. Assume that taxes do not exist.

(a) Using NI approach and an equity capitalisation rate of 18%, compute the total value of firm and the weighted average cost of capital if the firm has (i) no debt (ii) Rs. 3,00,000 debt and (iii) Rs. 6,00,000 debt.

(b) Using the NOI approach and an overall capitalisation rate of 12%, compute the total value of the firm, value of share and the cost of equity if the firm has (i) no debt (ii) Rs. 3,00,000 debt and (iii) Rs. 6,00,000 debt.

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Finance Basics: Ni approach and an equity capitalisation rate

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Finance Basics: Ni approach and an equity capitalisation rate

Reference No:- TGS038544

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Recent Questions Asked Finance Basics

Q : Problem on amount of the unrecognized gain

Q : Derive the demand equation for the dominant oligopolist

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Request for Solution File

Ask an Expert for Answer!!

Finance Basics: Ni approach and an equity capitalisation rate

Reference No:- TGS038544

Recent Questions Asked Finance Basics

Q : Problem on amount of the unrecognized gain

Q : Derive the demand equation for the dominant oligopolist

Q : Taxable income for the present taxable year

Q : Which president has the higher real income

Q : Ni approach and an equity capitalisation rate

Q : Sketch the isoquants corresponding to given situations

Q : Stock after the redemption

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Q : Casualty loss deduction

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