find out EPS and which scheme would meet the object of management

find out EPS and which scheme would meet the object of management

A company needs Rs. 12 Lacs for the installation of a new factory which would yield an annualEBIT of Rs. 2 lacs. The company has the objective of maximizing the EPS. It is considering the possibility of issuing equity shares plus raising a debt of Rs.200000, Rs.600000, Rs. 1000000.The current market price per share is Rs.40 which is expected to drop to Rs.25 per share if themarket borrowing were to exceed Rs. 750000.

find out EPS and which scheme would meet the object of management

Cost of borrowing is indicated as under:
Upto Rs.250000 10% p.a
Between Rs. 250001 and Rs.625000 14%p.a
Between Rs.625001 and Rs.1000000 16%p.a
Assuming tax rate of 50% work out the EPS and the scheme which would meet the objective of themanagement.

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