ABC company is thinking to change the capital structure of the firm. The Company has a total asset of OMR 40,000,000, and OMR 8,500,000 of EBIT and is taxed at a rate of 40%.

If the book value per share is OMR 20 Complete the following table (1.5 marks)

Debt %	Total asset	Debt (OMR)	Equity (OMR)	NO. of shares
0%	$40,000,000
10%	$40,000,000
20%	$40,000,000
30%	$40,000,000
40%	$40,000,000
50%	$40,000,000
60%	$40,000,000

For each level of debenture, find the total debt and interest amount. (1.5 marks)

Debt %	Total debt (OMR)	Interest rate %	Interest (OMR)
0%		0.0%
10%		7%
20%		8%
30%		9.5%
40%		11%
50%		13.5%
60%		16%

Based on your answer in parts a and b and the information given in the question, Find earnings per share (EPS) at each level of the debenture. (1.5 marks)

Debt %	EBIT (OMR)	Interest (OMR)	EBT (OMR)	Tax (OMR)	Net income (OMR)	No. of shares	EPS(OMR)
0%
10%
20%
30%
40%
50%
60%

Based on your answer in part c and given estimates of required return (Ke) in the table below. Find the value per share at various levels of the debenture. (1.5 marks)

Debt %	EPS(OMR)	Ke %	P0 (OMR)
0%		10.0 %
10%		10.3 %
20%		10.9 %
30%		11.4 %
40%		12.6 %
50%		14.8 %
60%		17.5 %