XYZ Ltd., experts a net income of $150,000. The company has 10%  500,000 debentures. The equity capitalization rate of the company is 10%. g (a) Calculate the value of the firm and overall capitalization rate accordin t the net income approach (ignore income tax). (b) If the debenture debt is increased to $750,000 and interest of debt i n change to 9%. What is the value of the firm and overall capitalizatio rate?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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XYZ Ltd., experts a net income of $150,000. The company has 10% 
500,000 debentures. The equity capitalization rate of the company is 10%.
g
(a) Calculate the value of the firm and overall capitalization rate accordin
t the net income approach (ignore income tax).
(b) If the debenture debt is increased to $750,000 and interest of debt i
n
change to 9%. What is the value of the firm and overall capitalizatio
rate?

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