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Question 4 Needs Grading Suppose that Ahmed is enthusiastic entrepreneur and is planning to set up his own business. The following table reports the alternative
Question 4 Needs Grading Suppose that Ahmed is enthusiastic entrepreneur and is planning to set up his own business. The following table reports the alternative sources of financing for his company. All values are in million dirhams Input data Plan A Plan B Total Assets 1000 1000 500 400 Debt 10% 500 600 No. of shares 100 80 Tax rate 30% 30% EBIT 250 250 Total equity Required? a. Compute the ROE and EPS ratios (2 pts) b. Which alternative of financing should Ahmed choose? Discuss the impact of the capital structure decision on the profitability of the company. (3 pts) Monday, October 19, 2020 4:03:31 PM GST OK
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