Company X and Company Y are in the same risk class and are identical in every respect except that company X uses debt (Levered Firm), while company Y does not. The levered firm has Rs 9,00,000...

Company X and Company Y are in the same risk class and are identical in every respect except that company X uses debt (Levered Firm), while company Y does not. The levered firm has Rs 9,00,000 debentures, carrying 10 per cent rate of interest. Both the firms earn 20 per cent operating profit on their total assets of Rs 15 lakhs.Assume perfect capital markets, rational investors and so on; a tax rate of 35 per cent and capitalisation rate of 15 per cent for an all-equity company.(a) Compute the value of firms X and Y using the Net Income (NI) Approach.(b) Compute the value of each firm using the Net Operating Income (NOI) Approach.(c) Using the NOI Approach, calculate the overall cost of capital (k0) for firms X and Y.(d) Which of these two firms has an optimal capital structure according to the NOI Approach? Why?e) Give graphical representation of all the cases