Q.1 ABC Ltd. Has the following capital structure: Ordinary shares 10 lakh Nos. @of Rs. 10 each Reserves and surpluses 10% Debentures each of face value Rs.100 (Rs. Lakhs) 100 40 60 200 The company needs Rs. 50 lakhs to execute a new project which will raise its operating profit from the current level of Rs.40 lakhs to Rs.55 lakhs. It is considering the following options: a. Issue equity shares at a premium of Rs.15 each for the entire amount. b. Issue of 12% debentures for the entire required funds. c. Issue equity hares for Rs. 25 lakhs at at premium of Rs.20 per share and issue 12% debentures for the balance amount. Required: Company's tax rate is 40%. You are required to evaluate each proposal and recommend the best alternative