Question

HA- : A company earned profitof Rs. 440000 before meeting itsinterest liability of Rs. 120000 on 12percent debentures. The tax rate is50 percent. The number of equityshares of Rs. 10 each is 80000.The company proposes to take-upan expansion scheme for which asum of Rs. 400000 is required.It is anticipated that afterexpansion the company will beable to achieve the same return oninvestment as at present.The funds required for expansioncan be raised either through 12percent debt or by issuing equityshares at par.You are required to computeEarnings per Share (EPS), ifadditional funds are to be raised by(a) raising debt or (b) by issue of equity shares

Answer 1

Explanation:

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