Teerath Ltd. is a widely held company. It is currently considering a major expansion of its production
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Teerath Ltd. is a widely held company. It is currently considering a major expansion of its production facilities and the following alternatives are available:
Particulars | Alternative 1 (Rs) | Alternative 2 (Rs) | Alternative 3 (Rs) |
Share Capital | 10,00,000 | 20,00,000 | 50,00,000 |
14% Debentures | 15,00,000 | 20,00,000 | |
18% Loan from Bank | 25,00,000 | 10,00,000 | |
Expected rate of return before tax is 30%. Rate of dividend of the company since 2000 has not been less than 22% and date of dividend declaration is 30th June every year. Corporate tax rate is 30%. Which alternative should the company opt with reference to tax planning?
Related Book For
Federal Taxation 2014 Comprehensive
ISBN: 9780133438598
27th Edition
Authors: Timothy J. Rupert, Thomas R. Pope, Kenneth E. Anderson
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