Everest Manufacturing Industrial Limited started 4 years ago, is expected to grow at a higher rate of 4 years in the coming years and thereafter the growth rate will fall and stabilize at a lower level. The following inf

Everest Manufacturing Industrial Limited started 4 years ago, is expected to grow at a higher rate of 4 years in the coming years and thereafter the growth rate will fall and stabilize at a lower level. The following information has been made available to you for your analysis: Base Year (Year 0) Information (In Million ₹) Revenues 3000 Million EBIT 500 Million Capital Expenditure 350 Million Depreciation 250 Million Net Working Capital as a percentage of EBIT 25% Corporate tax rate (for all scenarios) 30% Paid-up Equity Capital (10 Face Value) 400 Million Market value of debt 1200 Million Inputs for the High Growth Phase Length of high growth phase 4 years Growth rate in revenues, depreciation 20% Net Working Capital as a percentage of EBIT 25% Cost of debt (pre-tax) 13% Debt-equity ratio 1:1 Risk-free rate 11% Market risk premium 7% Equity Beta 1.129 Inputs for the Stable Growth Phase Expected growth rate in revenues and EBIT 10% Capital expenditure are offset by depreciation Net Working Capital as a percentage of EBIT 25% Cost of debt (pre-tax) 12.14% Risk-free rate 10% Market risk premium 6% Equity Beta 1.0 Debt-equity ratio 2:3 With above information background, answer the following questions of the Management: What will be the Cost of Capital and WACC for the high growth phase and for the stable growth phase, if the debt-equity ratio is 1:2 during high growth phase and 3:2 in the stable growth phase? Will this change impact the Value of the Firm? If yes, what will be the value of the Firm with revised debt equity ratio?