Question

8. Firms X and Y are identical except that firm X is not levered while Firm Y is levered. The following
data relate to them :
Firm X
F ₹
5,00,000
0
Firm Y
₹ F
5,00,000
2,50,000
Assets
Debt capital
(9% Interest)
Equity share capital
No. of shares
Rate of Return on assets
5,00,000
2,50,000
(50,000)
(25,000)
20%
20%
Calculate EPS for both firms, assuming tax rate of 50%. Will it be advantageous to firm Y to raise
the level of debt capital to 75% ?
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Answer 1

Answer:

I don't know what is answer of your question