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Beta Tech itd has currently an ordinary share capital of 2 5 lakhs, consisting of 2 5 , 0 0 0 equity shares of 1
Beta Tech itd has currently an ordinary share capital of lakhs, consisting of equity shares of each. The management is planning to raise another lakh to finance a major programme of expansion through one of four possible financing plans. The options are as follows:
a Entirely through ordinary shares of each, lakh through ordinary shares of each and lakh through long term borrowings at interest per annum
b lakh through ordinary shares of each and lakh through long term borrowings at interest per annum
c lakh through ordinary shares of each and lakh each through Preferences shares.
The company's expected EBIT is lakh. Assuming a tax rate of Determine the EP in each alternative and comment on the implications of financial leverage.
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