Question
Pramila Textile Company is capitalised with $ 10,00,000 divided in 1,000 common shares of $1,000 each. The management wishes to raise another $ 10,00,000 to
Pramila Textile Company is capitalised with $ 10,00,000 divided in 1,000 common shares of $1,000 each. The management wishes to raise another $ 10,00,000 to finance a major programme of expansion through one of our possible financing plans. The management may finance the company with - common stock, (2) $ 5 lakhs in common stock and (1) all $ 5 lakhs in debt at 5 per cent interest, (3) all debt at 6 per cent interest, or (4) $ 5 lakhs in common stock and $ 5 lakhs in preferred stock with 5 per cent dividend. The Company's existing earnings before interest and taxes (EBIT) amounted to $ 1,20,000. Corporation Tax is assumed to be 50 per cent.
Calculate Earnings per share of proposal 1,2,3, and 4
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