A companys present capital structure consists of 20 lakh equity shares of Rs.10 each. It requires Rs.2 cr of external financing for which it is considering two alternatives: (a) issuing 20 lakh equity shares of Rs.10 at par (b) issuing 4,00,000 equity shares of Rs.10 at par value and raising the remaining amount through debentures carrying 15% interest. Assume the companys tax rate to be 40%. The company is considering three probable economic scenarios and feels that EBIT scenarios could be as follows:

Economic Scenario	EBIT	probability
Poor	Rs. 52 lacs	0.2
Normal	Rs.60 lacs	0.5
Good	Rs.68 lacs	0.3

(i) What is the behaviour of EPS under fluctuating EBIT under both financial plans? (ii) In order to proceed with its analysis the company would like to know the EBIT indifference point between the two alternatives (iii) In case of current case, how does knowledge of various possible EBIT scenarios help the company in planning capital structure?