(b) Rank the alternatives according to EPS over varying levels 20.3 Debt versus Equity Vardhaman Corporation presently has one million outstanding equity shares 10 par) selling at * 15 per share. It needs 10 million of additional funds which can be raised in two ways: (a) issue of 0.8 million equity shares at 12.50 per share, (b) issue of debt capital carrying 15 percent interest. The expected earnings before interest and taxes after the new funds are raised will be *7 million per year with a standard deviation of 3 million. Vardhaman Corporation's tax rate is 60 percent. What is the probability that the debt alternative is better than the equity alternative with respect to earnings per share? int of debt of 8 nercent and a tax rate