question archive Maryland Limited's capital structure consists of Rs 60 crore worth of equity capital(Rs 10)
Maryland Limited's capital structure consists of Rs 60 crore worth of equity capital(Rs 10)
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Maryland Limited's capital structure consists of Rs 60 crore worth of equity capital(Rs 10). The firm's current EBIT is 86 crore and interest is 16 crore .
The firm requires Rs. 200 crore of external financing for which it is considering two alternatives:
Alternative A : Issue of 1.6 crore equity shares of Rs 10 par at Rs. 125 each.
Alternative B : Issue of Rs.200 crore of debentures carrying 8 percent interest rate.
Tax rate is 30%.
What is the EPS-EBIT indifference point?
What is the EPS at this point?
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