Assertion A): According to Net Income (NI) approach, capital structure decision is relevant in the valuation of firm.
Reason R): A firm can change its total value and its overall cost of capital by change in the degree of leverage in its capital structure.
In the context of the above two statements, which one of the following options is correct?
1
Both A) and R) are correct and R) is the right explanation of A)
2
Both A) and R) are correct and R) is not the right explanation of A)
3
Both A) and R) are incorrect
4
A) is correct and R) is not correct