A company has a capital of Rs 10,00,000 with an equity capitalisation rate of 14% with no taxes. The finance manager likes to introduce financial leverage for which he has the following information:...

A company has a capital of Rs 10,00,000 with an equity capitalisation rate of 14% with no taxes. The finance manager likes to introduce financial leverage for which he has the following information:

Find (a) equity capitalisation rate based on M-M approach, and (b) the amount of debt that denotes the optimal capital structure.