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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Related Book For
Financial Management
ISBN: 9789352605606
1st Edition
Authors: Swapan Sarkar, Bappaditya Biswas, Samyabrata Das, Ashish Kumar Sana
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