Keerthinath Corporation presently has two million outstanding equity shares $($Rs$.10$

par$)$ selling at Rs$.11$ per share and no outstanding debt $.$ It needs Rs$.8$ million of

additional funds which can be raised in two ways:

$($a$)$ issue of $0\mathrm{.}8$ million equity shares at Rs$.10$ per share, $($b$)$ issue of debt capital

carrying $14$ percent interest.

The expected earnings before interest and taxes after the new funds are raised will be

Rs$.6$ million per year with a standard deviation of Rs$.2$ million. Keerthinath

Corporation's tax rate is $35$ percent. What is the probability that the debt alternative is

better than the equity alternative with respect to earnings per share.