2. (i) Kappa Ltd. needs Rs. 500,000 for construction of new plant. The following three financial plans are feasible: (a) The company may issue 50,000 equity shares at Rs 10 per share (b) The company may issue 25000 equity shares at Rs 10 per share and 2500 debentures of Rs 100 denomination bearing an 8% rate of interest (c) The company may issue 25000 equity shares at Rs 10 per share and 2500 preference shares at Rs 100 per share bearing 8% rate of interest." If the company's earnings before interest and taxes is Rs. 60,000 then what are the earnings per share under each of the three financial plans? Which alternative would you recommend and why? Assume corporate taxes to be 50%. (). If in the previous question, for the suggestive alternative, the EBIT changes to Rs 100,000 calculate the degree of financial leverage? (15+5 marks)