Manya Makeup products Ltds capital structure consists of 1.5 million equity shares and 500,000 preference shares. Preference

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Manya Makeup products Ltd’s capital structure consists of 1.5 million equity shares and 500,000 preference shares. Preference shares carry a dividend of Rs. 12 per share. The EPS is Rs. 2.00. The company requires Rs. 10 million of external financing for which it is considering 2 alternatives:-

(i) issuing 1 million equity shares for Rs. 10 each,

(ii) Issuing Rs. 10 million worth of Debentures carrying 15% interest.

Compute the EPS-EBIT indifference point when tax rate is 50%. Write a detailed note on the significance of indifference point.

Posted Date: Dec 03, 2021 02:27 AM

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Manya Makeup products Ltds capital structure consists of 1.5 million equity shares and 500,000 preference shares. Preference

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1 EPS when use first alternative Total no of equity share ... View the full answer

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