Calulation required for problem mentioned below - Reg

[SRINIVASARAO PEDDI]

It has to decided to raise ₹ 5,00,000 of additional capital funds and has identified two plans. The Information is as follows

Present Capital Structure : 3,00,000 equity shares of ₹ 10 each , 10% Bonds of 20,00,000

Tax Rate : 50%

Current EBIT : ₹ 17,00,000/-

Current EPS : ₹ 2.50

Current Market Price : ₹ 25 Per Share

Financial Plan I : 20,000 Equity shares @ ₹ 25 Per Share

Financial Plan II : 12% Debentures of ₹ 5,00,000

Find out which plan is better.

Please calculate and send me the solution on priority basis.

AI Summary

User Seeks Advice on Raising Additional Capital: Issue Equity Shares or Debentures? A user initiated a query regarding a decision to raise 5,00,000 in additional capital, considering two financial plans. The current capital structure includes 3,00,000 equity shares at 10 each and 10% bonds totaling 20,00,000, with a tax rate of 50%, EBIT of 17,00,000, EPS of 2.50, and a market price of 25 per share. The two options are issuing 20,000 equity shares at 25 each or 12% debentures of 5,00,000. The user seeks advice on which plan is preferable. A respondent suggested consulting an expert in the field.