Question
Teerath Ltd. is a widely held company. It is currently considering a major expansion of its production facilities and the following alternatives are available: Particulars
Teerath Ltd. is a widely held company. It is currently considering a major expansion of its production facilities and the following alternatives are available:
| Particulars | Alternative 1 (Rs) | Alternative 2 (Rs) | Alternative 3 (Rs) |
| Share Capital | 10,00,000 | 20,00,000 | 50,00,000 |
| 14% Debentures | 15,00,000 | 20,00,000 | |
| 18% Loan from Bank | 25,00,000 | 10,00,000 | |
Expected rate of return before tax is 30%. Rate of dividend of the company since 2000 has not been less than 22% and date of dividend declaration is 30th June every year. Corporate tax rate is 30%. Which alternative should the company opt with reference to tax planning?
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Federal Taxation 2014 Comprehensive
Authors: Timothy J. Rupert, Thomas R. Pope, Kenneth E. Anderson
27th Edition
978-0133452006, 013345200X, 978-0133450118, 133450112, 978-0133438598
