6. XYZ Ltd wishes to raise 1,000,000 to finance the acquisition of new assets. It is considering three alternative ways of financing assets: () to issue only equity shares at 20 per share, (i) to borrow *500,000 at 14 per cent rate of interest and issue equity shares at 20 per share for the balance or (ii) to borrow 750,000 at 14 per cent rate. of interest and issue equity shares at 20 per share for the balance. The following are the estimates of the earnings from the assets with their probability distribution:

EBIT R Probabilities 80,000 0.10 120,000 0.20 160,000 0.40 200,000 320,000 0.20 0.10 You are required to (i) calculate the earnings per share (ii) compute the indifference points, and (iii) determine the financial risk, for each of the three alternatives. Assume a tax rate of 35 per cent.