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please ans asap A Company is considering a plan to raise Rs 2,00,000 to finance modernization of its plant. The following three financing alternatives are
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A Company is considering a plan to raise Rs 2,00,000 to finance modernization of its plant. The following three financing alternatives are available: PLAN 1: The Company may issue 20,000 shares @ Rs 10 per share. PLAN 2: The Company may issue 10,000 shares @ Rs 10 per share and 1,000 debentures of Rs 100 denomination bearing a 14 percent rate of interest. PLAN 3: The Company may issue 5,000 shares @Rs 10 per share and 1500 debentures of Rs 100 denomination bearing a 14 per cent rate of interest. 1. If the company's EBIT is Rs 25,000, What are the respective earnings per share for each of the three alternatives? 2. Which alternative would you recommend? Corporate Tax rate is assumed to be 35 per centStep by Step Solution
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