6. Desai Communications Ltd. wants to implement a project for which 60,00,000 is required to be raised from the market as a means of financing the project. The following financing plans and options are at hand: (Numbers in '000) Plan 3 Plan 1 Plan 2 Option 1: Equity shares 60 60 60 Option II: Equity shares 30 40 20 12% Preference shares Nil 20 20 10% Non-convertible debentures 30 Nil 20 3 Assuming corporate tax to be 35 percent and the face value of all the shares and debentures to be 100 each, calculate the indifference points and earnings per share (EPS) for each of the financing plans 1 and 2 and between 1 and 3. Which plan should be accepted by the company? 14 6. Desai Communications Ltd. wants to implement a project for which 60,00,000 is required to be raised from the market as a means of financing the project. The following financing plans and options are at hand: (Numbers in '000) Plan 3 Plan 1 Plan 2 Option 1: Equity shares 60 60 60 Option II: Equity shares 30 40 20 12% Preference shares Nil 20 20 10% Non-convertible debentures 30 Nil 20 3 Assuming corporate tax to be 35 percent and the face value of all the shares and debentures to be 100 each, calculate the indifference points and earnings per share (EPS) for each of the financing plans 1 and 2 and between 1 and 3. Which plan should be accepted by the company? 14