● 6. The Capital Structure of Moon Ltd. is given as follows:

` (in Lakh)

Equity share capital (`10 per share) 10.00 Retained earnings 6.00 10% Preference Share Capital (`) 4.00 20.00 The firm has planned to undertake an expansion scheme of `10,00,000 which can be financed (i) entirely by issue of equity shares of `10 each or (ii) by issue of 12% debentures of `100 each at par.
As a result of expansion, sales and operating fixed cost will increase by 60% and 75%, respectively. The other relevant information are given as follows:
Sales `50,00,000 Variable cost 60%
Operating fixed cost `5,00,000 Corporate tax 40%
Calculate Leverages and EPS before and after expansion and give your opinion for taking appropriate decision with respect to financing.