A firm is considering two alternatives of capital structure as follows

Scenario 1 Scenario 2

EBIT (Rs) 150000 150000

Cost of Equity 10% 10%

Cost of Debt 7% 7%

Amount of Debt(Rs) 1000000 500000

Tax rate 25% 25%

As per net income approach which one looks better. Compare on the basis of WACC.

A firm is considering two alternatives of capital structure as follows

Scenario 1 Scenario 2

EBIT (Rs) 200000 200000

Cost of Equity 12% 12%

Cost of Debt 9% 9%

Amount of Debt(Rs) 800000 1000000

Tax rate 25% 25%

As per net income approach which one looks better. Compare on the basis of WACC

A firm is considering two alternatives of capital structure as follows

Scenario 1 Scenario 2

EBIT (Rs) 300000 300000

Cost of Equity 14% 14%

Cost of Debt 10% 10%

Amount of Debt (Rs) 1200000 1600000

Tax rate 25% 25%

As per net income approach which one looks better. Compare on the basis of WACC.