25. X Ltd. is in need of `25,00,000 for its new plant. It is expected that the plant would yield an EBIT of `5,00,000. In selecting the financial plans, the management of the company decides on the basis of maximum EPS. The company has the following three options of financing:

Option I: By raising debt of `2,50,000 and the balance by issuing equity shares.

Option II: By raising debt of `10,00,000 and the balance by issuing equity shares.

Option III: By raising debt of `15,00,000 and the balance by issuing equity shares.

The company’s share is currently selling at `150 but is expected to decline to `125 when the amount of borrowed capital exceeds `10,00,000. Cost of debt is as follows:

Up to `2,50,000: 10%

Above `2,50,000 and up to `10,00,000: 15%

Above `10,00,000: 20%

Applicable tax rate is 50%. Which form of financing should the company choose?