A Ltd. requires Rs.75,00,000 for a new plant. The earnings before interest and taxes is Rs.25,00,000. It has three alternatives to finance the projectby raising debt of

a) Rs.10,00,000 or

b) Rs.15,00,000 or

c) Rs.20,00,000

And the balance, in each case, by issuing equity shares.

The companys share price at the beginning was quoted at Par Value. Now the share price is quoted at 5 times of Par Value. When the debt component is or greater than Rs.15 lakhs, the share price falls 25 % from the existing price quoted. The funds can be borrowed at the rate of 10 per cent. The funds available in other countries is cheaper by 50% but the CFO is not able to access the funds to the insufficient documentation provided to the stock exchange. The tax rate is 50 per cent. Which form of financing is best for the company?