ABC company is expecting an ebit of rs. 100000 whose equity capitalisation rate is 12.5 percent. Currently the company has a debt capital of 400000 at 8 percent. Calculate the value of firm and cost of capital case 1 when the company increases debt by 200000 uses proceeds to repurchase equity shares. Case 2 When a compan reduces debt to 200000 by issue of equity shares of the same amount. Use traditional approach.