Question
Two firms, Firm A and Firm B, are identical in all
respects except their capital structure. • Firm A (Unlevered): It is entirely equity financed with equity capital of ₹10,00,000. • Firm B (Levered): It has equity capital of ₹5,00,000 and debt capital of ₹5,00,000, carrying an interest rate of 10% per annum. • The expected EBIT of both firms is ₹2,00,000. • Assume there are no corporate taxes and capital markets are perfect. You are required to calculate the value of both firms under the Modigliani and Miller (MM) Approach (No Taxes) and briefly state the principle underlying your result.Solution
MM without taxes says value independent of capital structure. Value = EBIT/Ke. Same for both firms. 
A boat covers 132 km downstream in 3 hours and 96 km upstream in 4 hours. The boat takes 8 hours to travel 'D' km upst...
Speed of a boat in still water is three times the speed of the boat in upstream. If the boat takes 50 minutes to cover 25 km in downstream, then find th...
The ratio of the speed of the boat in upstream to that in downstream is 5:9, respectively. If the speed of the current is 10 km/h, find the speed of the...
Speed of a boat in still water is 3 times more than the speed of stream. If boat covers 135 km in downstream in 9 hours, then find the time taken by the...
Speed of the boat in still water and the downstream speed of the boat are in the ratio of 5:6 respectively. The boat covers 80 km upstream and 72 km dow...
The speed of a boat in still water is 6 km/hr more than that of the current. The time taken by the boat to cover 925 km downstream is 18.5 hours. Find t...
The speed of a boat in downstream is 20% more than speed of boat in still water. If the boat travels a distance of 90 km upstream in 15 hours then find...
The ratio of the speed of boat ‘A’ in still water, the speed of boat ‘B’ in still water and the speed of the current is 8:5:2, respectively. If ...
- A boat has a speed of 18 km/h in still water, while the stream flows at 6 km/h. How much time (in hours) will it take the boat to travel 180 km upstream an...
Speed of a boat in still water to speed of boat in upstream is 12: 7. If the boat can travel 425 km in downstream in 5 hours, then find the time taken b...
