ACS Ltd wants to raise Rs.200 million in new capital. The company can sell quity at Rs.50 per share or sell bonds at par with a 10% coupon rate. ACS currently has an interest expense of 40 Million. The company has 12 million outstanding shres and is in 25% tax bracket. Calculate the cross over EBIT and EPS from issuing new debt or equity is the same?

Answer rating: 100% (QA)

To determine the crossover EBIT and EPS where issuing new debt or equity results in the same outcome ... View the full answer