Distance Sensor Ltd. is an all equity financed company with a market value of ₹35,00,000 and cost of equity, K e =20%. The company wants to buy-back equity shares worth ₹8,00,000 by issuing and raising 10% perpetual debt

Distance Sensor Ltd. is an all equity financed company with a market value of ₹35,00,000 and cost of equity, K e =20%. The company wants to buy-back equity shares worth ₹8,00,000 by issuing and raising 10% perpetual debt of the same amount. Rate of tax may be taken at 35%. Applying the MM Model (with taxes), how would the capital restructuring affect Market value of Distance Sensor Ltd. Cost of equity (K e ) Weighted average cost of capital (WACC) of the company.