leverage

leverage

Altd considering three plans. The key information is as follows:
a) Total funds is to be raised, Rs. 2,00,000
b)Fiancing Plans;
Plan Equity(%) Debt(%) Preference
A 100 —- —
B 50 50 —
C 50 —- 50

leverage

c) Cost of debt 8%age; Cost of Prefence share 8%age
d) tax rate,35%
e) equity shares of the face value of Rs 10 eachwill be issued at a premium of Rs.10 per share.
f) Expected EBIT Rs.80,000
Determinefor each plan:
a) EPS and fiancial break-even point.
b) Indicate if any of the plan dominate, and compute the EBIT range among the plan for indifference.

 

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