The expected earnings of a firms A and B. are rs. 1,20,000 with a standard deviation of rs.30,000. Firm A is non levered. Firm B is levered and must pay annual interest charges of rs. 30,000. Which firm is riskier? Why? Explain your answer by considering the impact of variation in EBIT on EPS for both the firms.
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The expected earnings of a firms A and B. are rs. 1,20,000 with a standard deviation of rs.30,000. Firm A is non levered. Firm B is levered and must pay annual interest charges of rs. 30,000. Which firm is riskier? Why? Explain your answer by considering the impact of variation in EBIT on EPS for both the firms.
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