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ABC company is considering two financing mixes for its capital structure. Plan I is an all-equity mix (unlevered) and Plan II is a levered mix.
ABC company is considering two financing mixes for its capital structure. Plan I is an all-equity mix (unlevered) and Plan II is a levered mix. For Plan I, the firm will consist of 315,000 equity shares outstanding and it will have 225,000 equity shares outstanding along with Rs. 4.14 million in debt outstanding under Plan II. If EBIT is Rs. 750,000 each under both the plans and the interest rate on the debt is 10 percent, what is the EPS for Plan II (levered firm), if there are no taxes.
Rs.1.07
Rs.3.33
Rs.2.38
Rs.1.49
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