EXERCISE 9 Given below is the Financial Position of Mega Juta Bhd. Financial Position as at 31 December 2017 (RM'000) Assets Current assets 116.000 Fixed assets 286.000 Liabilities & Equities Current liabilities 70.000 Long term debt a 10% 160,000 Common stock @ RM4 per 172,000 share 402.000 402,000 Mega Juta Bhd needs to expand its business and requires additional fund of RMI, 000, 000. The company has two plans to raise funds: Plan 1 50% - common stock RM50 per share 50% - 10% preferred stock @ RM100 par value Plan 2 60% -6% coupon bond 40% - 10% preferred stock (a RM100 par value The corporate tax rate is 30 percent. - i) Calculate the point of indifference between the two alternatives (in EBIT) ii) If EBIT for next year estimated at RM20 million, which alternative should the company adopt and why