Good garden Company has currently an ordinary share capital of Rs 25 lakh, consisting of 25,000 shares of Rs 100 each. The management is planning to raise another Rs 20 lakhs to
finance a major programme of expansion through one of four possible financing plans. The options are as under :
(a) Entirely through ordinary shares.
(b) Rs. 10 lakh through ordinary shares, and Rs. 10 lakh through long-term borrowings at
15% interest per annum.
(c) Rs. 5 lakh through ordinary shares, and Rs. 15 lakh through long-term borrowings at 16%
interest per annum.
(d) Rs. 10 lakh through ordinary shares, and Rs. 10 lakhs through preference shares with
14% dividend. 

To analyze the best financing option for Good Garden Company to raise Rs. 20 lakhs, we need to consider various factors such as cost of capital, risk, control, and preference of investors.

Option (a): Entirely through ordinary shares
This option involves issuing 20,000 new shares of Rs. 100 each to raise Rs. 20 lakhs. This will increase the total number of shares to 45,000. As a result, the earnings per share (EPS) will decrease as the profits will be spread over more shares. Moreover, the existing shareholders may not prefer to dilute their ownership and control by __________ ________ _____ _____ _____ ___ _______ ______ __________.
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