Calulation required for problem mentioned below - Reg, Accounting - Auditing

[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.

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[DR.MARIAPPAN GOVINDARAJAN]

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