13. A company has the choice of issuing 10% debentures or `100 equity shares to raise `20...

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● 13. A company has the choice of issuing 10% debentures or `100 equity shares to raise

`20 lakh to meet its long-term investment requirements. Its current capital structure consists of 20000 ordinary shares of `100 each, 8% debentures of `10,00,000 and 12%

preference shares of `10,00,000. Determine the level of EBIT at which EPS would be the same, whether the new funds are acquired by issuing ordinary shares or by issuing 10%

debentures. Tax rate is assumed to be 50% (ignore dividend distribution tax).

Also, construct EBIT-EPS chart assuming various levels of EBIT.


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Financial Management

ISBN: 9789352605606

1st Edition

Authors: Swapan Sarkar, Bappaditya Biswas, Samyabrata Das, Ashish Kumar Sana

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