The present earning of company before …

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The present earning of company before interest and tax is 10lakhs . the company wants to increase its total capital investment by 50% though an issue of 10%debenture. At present the total capital of the company is 50lakhs ,out of which 40lakhs has been raised through equity and rest as issue of 10%debenture. The tax is levied @40%. The face value of an equity shares is 10 and that of a debenture is 100.
A) calculate the projected EPS of the company on issueing debenture. Assume that the ROI of the company remains unchanged.
B)do you think the company has taken the right decision by choosing debt to raise further capital?
Posted by Sandhiya Sandy 7 years, 9 months ago
- 1 answers
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Sandhiya Sandy 7 years, 9 months ago
0Thank You