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at UU you mean by capital structure? A Company expects a net income of 600,000 dhs. It has 500,000 dhs, 9% debentures The equ
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Answer #1
Value of the firm under NI approach = Value of
equity+Value of debt.
1] EBIT 600000
Interest [500000*9%] 45000
NI 555000
Value of equity = 555000/11% = 5045455
Value of debt [given] 500000
Value of the firm 5545455
2] Overall capitalisation rate = EBIT/Value of the firm = 600000/5545455 = 10.82%
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