Question

It has decided to raise ₹500000 of additional capital funds and has identified two plans the information is as follows: present capital structure = 300000 equity shares of ₹10 each, 10%. Bonds of 20,00,000. Tax rate= 50%. Current EBIT= ₹17,00,000. Current EPS= ₹2.50. Current market price = ₹25 per share. Financial plan 1= 20000 equity shares @ ₹25 per share. Financial plan 2= 12% debentures of ₹500000. Find out which plan is better?

Answer 1

here is the answer given information eps higher in plan 2 so that plan 2 is better it be choose