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I need correct answer The promoters of a company are planning two different cost structures as follows: i) Variable cost 40% of sales, Fixed Cost
I need correct answer
The promoters of a company are planning two different cost structures as follows: i) Variable cost 40% of sales, Fixed Cost Rs 60 lacs Or ii) Variable Cost 50% of sales, Fixed Cost 80 lacs Projected average sales Rs. 160 lacs. They consider two alternative financing alternatives for the above: (1) Equity Rs.60 lacs and Debt Rs.40 Lacs, or (ii) Equity Rs.40 lacs, Debt Rs.60 lacs, For the first alternative, interest rate is worked out to be 8% and for the second alternative it is 10%. Tax Rate is 25%.Which combination of alternatives is the best decision for investment. Calculate the leverage and comment. 12:37 PM Step by Step Solution
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