(Problem Solving LBO vs Equity ) Assume that ABC Enterprise, with long-term capitalization consisting entirely of 5 million shares, wants to raise P2 million for the acquisition of special equipment by:

1. Selling 40,000 ordinary shares at P50 each

2. Selling bonds at 10% interest

3. Issuing preference shares with an 8% dividend. The present EBIT is P1,000,000, the income tax rate is at 50%, and 100,000 shares of ordinary shares are now outstanding.

Compute (a) the earnings available to ordinary shareholders and (b) EPS, showing a comparative table using the assumptions (items# 1-3) above.