Question

1. There are two firms which are identical in all respects except in terms of their capital structure

as can be observed from the details given below:

R Ltd. S Ltd.

Levered Unlevered

EBIT (Rs.) 2,00,000 2,00,000

Debt (Rs.) 6,00,000 0

Rate of Debt 15% __

Ke 20% 15%​

Answer 1

Answer:

Rate of debt 15% above. all of these

Answer 2

Answer:

r Ltd firm value = rs 11,50,000

r Ltd firm value = rs 13,33,333