A limited company has equity share capital of $500,000 (face value $100) to meet the expenditure of an expansion program, the company wishes to raise $300,000 and is having following two alternative sources to raise funds:

Plan A: To have full money from the issue of equity shares

Plan B: To have $100,000 from equity and $200,000 from borrowings from the financial institutions @10% per annually. 

The company\'s earning is $150,000. The corporate tax: 50%. Select a suitable alternative out of two to raise the required funds.

Answer rating: 100% (QA)

To select better alternative company need to calculate earning per share ... View the full answer