Page 373 - Corporate Finance PDF Final new link

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BRILLIANT’S Capital Structure Theories 373

Q.3. Write a short note on intermediate approach.
B§Q>a‘r{S>EQ> {d{Y na g§{já {Q>ßnUr {b{IE& [See Q.36]
Q.4. What are the assumptions used in Modigliani and Miller approach.
‘mo{X{½bEZr VWm {‘ba {d{Y ‘| Cn¶moJ H$s OmZo dmbr EOåneÝg ³¶m h¢? [See Q.37]
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PRACTICAL QUESTIONS

4.2.1 There are two firms X and Y which are exactly identical except that X does not use any
debt in its financing, while Y has ` 1,00,000 (5%) debentures in its financing. Both the
firms have earnings before interest and tax of ` 25,000 and the equity capitalization rate
is 10%. Assuming the corporation tax of 50%, calculate the value of the firm.
[Ans. Value of firm = ` 3,00,000]
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