Two companies, X and Y, belong to the equivalent risk group. Th... | Filo

Q.4 The two companies, U and L, belong to an equivalent risk class. These two firms areidentical in every respect except that U Company is unlevered while Company L has 10 percentdebentures of Rs 30 lakh. The other relevant information regarding their valuation andcapitalization rates are as follows:ParticularsFirm UFirm LNet operation income (EBIT)Rs 7,50,000Rs 7,50,000Interest on debt (I)–3,00,000Earnings to equity holders (NI)7,50,0004,50,000Equity-capitalisation rate (ke)0.150.20Scanned by C