Zabir Inc. has 30,000 common stock of Tk.100 each aggregating Tk.3000,000 and 10% debt of Tk.500,000. It requires additional capital of Tk.600, 000. In order to raise such capital it has following three alternatives.

i. 100% equity

ii. 50% equity and 50% preferred stock at 12% dividend. Price per share of preferred stock is Tk. 100

iii. 100% debt at 10% interest Tax rate is 40%.

Calculate EPS under each of the three alternatives if earnings before interest and tax (EBIT) is Tk. 1, 200,000. Which one would you prefer?