Word Count : 839

---

To evaluate the best financing option for The Rising Sun Company in terms of maximizing Earnings Per Share (EPS), we need to analyze the different capital structure alternatives: all-equity financing or combinations of equity and debt. The company requires ₹24 crores for a new assembly line, with an expected EBIT of ₹4 crores annually. Here are the scenarios being considered: Alternatives for Financing: 1. All Equity (₹24 crores) 2. ₹4 crores Debt + ₹20 crores Equity 3. ₹6 crores Debt + ₹18 crores Equity 4. ₹20 crores Debt + ₹4 crores Equity ### Assumptions: * EBIT = ₹4 crores annually * Tax rate = 30% (assumed standard corporate tax rate) * Current market price per share = ₹80, but will drop to ₹50 if borrowing exceeds ₹7.5 crores * Cost of Debt: * Up to ₹5 crores → 10% * ₹5 to ₹10 crores → 14% * Above ₹10 crores → 18% Now, we will evaluate each option using the EPS = (EBIT – Interest – Tax) / Number of Shares formula. --- ### Option 1: All Equity Financing * Total Equity = ₹24 crores * Price per share = ₹80 * Number of shares issued = ₹24 crores / ₹80 = 30 lakhs shares * Interest = 0 _____ _______ _____ __________ __________ ______.
_________ _____ ________ ______ ________ _________.
_________ ____ ____ ______ ___ _____ ________.
__________ ________ ____ ______ _________ ______ ________ _______ __________ _______ ______.
________ _____ ____ ________ _______ _________ _______ ___ __________ ___ ___.
_________ _____ ___ _____ ______ __________ _______ _____.
________ _________ ____ _____ _______ ____ ___.
________ ___ __________ _________ __________ __________ ________ __________ __________ ______.
________ ______ _______ __________ ______ ___ _______ _________ _____ ________ ______ _____.
____ __________ ______ _______ _____ ____.
____ _________ ______ ________ _______ _______ ____ _______ ___ _____.
_______ ___ _______ _________ ___ __________ __________ ___ _____.
_________ ___ ______ _______ ________ __________ ______ ______ ____ __________.
_________ __________ ________ ____ __________ __________ ___ _____ ___ _________ __________.
_________ __________ ________ _______ ___ _________ _________ ____ _________ ________ _____ _____.
__________ __________ ______ ___ _______ ______ ________ _____ ______.
__________ ____ ______ __________ __________ _________.
_______ ____ _________ __________ _________ _________ ________ ____ ______ _______ ________.
______ ________ _____ _________ _______ ____ ______ ___ _____ ___ _____ _________.
__________ _____ ________ _________ _________ _______ ________ _______ ___ ____.
__________ ____ _____ ___ __________ ______ __________ _______.
____ _______ _______ ________ ___ ___ ____ ______ _______ _________ _______.
___ __________ ________ __________ ___ ___ _______ ________ _____.
___ __________ ____ ___ ________ _____ ______ __________.
____ ___ _____ _____ _______ ___ ________ ______ __________.
_________ _________ ________ _______ _________ __________ _______ _____ ____ _____ ____.
____ ______ ____ ______ __________ ___ ___ ____ _______ ______ ____ ______.
____ _______ ____ ____ ___ ___.
____ __________ __________ ________ _____ _____ _________.
___ ________ __________ _________ ___ ____ _________ ______ ____ _______.
___ _____ _______ ____ ______ ____ ___ _____.
_____ _______ __________ _________ _______.
______ _________ ___ ___ ___ _______ __________.
_________ ___ ______ __________ _____ ______ __________ ____ ________ _____ ________.
______ _____ _________ ___ _____ _____.
____ ________ ___ _______ ____ __________ ________ _____ ________ ______ ______.
______ ____ __________ _____ _________ ______ ________ ________ __________ _____.
___ _______ _____ _____ ___ __________ ____.
________ __________ _________ ______ ____ __________ ______ _____ __________ _____ __________.
____ ____ _______ ________ ________.
_________ _______ _________ __________ ________ _____.
_________ _______ ____ __________ _____ ________ ______.
_____ ___ ______ _______ ______ ____ _____ ___ ______ _______ ___ ________.
___ ______ ______ _________ _______ ___ _________ ____ ___ _________ ___ __________.
____ _______ ___ ______ _____ ________.
_______ __________ _____ ________ __________ _________ _________ _______ _______.
______ _____ ____ _____ _______ ________.
_________ ____ _________ ___ _________ ________ _________ _________ __________.
_______ _____ ____ ___ ___ _____ _________ _________ ___ _____.
_________ ___ ________ ____ _____.
________ ___ __________ ____ _________ __________ ___ ___ _____.
____ ______ ___ ____ _____ ___ _______ ____ _________.
___ ____ ________ __________ ______ __________.
________ ___ _______ ____ _________ ___ ________ ________ ________ ______.
_____ ______ ________ ______ ____ ________.
________ __________ ________ ________ ______ ________ ________ __________.
______ ____ _________ _________ ___ _____ ___ _______ __________.
________ ______ ________ ____ ______ ___ __________ _____ ____.
__________ _______ ____ __________ ________ ____ _________ ___ ___ _________ _______ _________.
____ _____ __________ ______ _______ ________.
____ _____ _______ _________ ________ ____ _________ _______.
____ ___ _____ ________ ____ _____ ________ ___ ___ ______ _______ ____.
___ ________ ____ ________ ____ _______ ___ __________ ____ _________.
__________ __________ ___ ____ ____ _____ ______ ________ ______.
______ ____ ____ ___ ___.
_______ ________ ____ __________ _________ _______ ___ __________ __________ _________ ___.
_______ _________ ___ _________ _________ ____ ______ ____.
____ ___ __________ ____ ____ ___.
________ ______ ______ _____ ________ ________ _____ ______ ________ _______ ___ ________.
_______ ______ _________ ___ ___ _______ __________.
_________ __________ ____ ____ _________ _____ ______ _______ ______.
________ __________ ______ ________ ______ ____.
__________ ____ _______ ___ ____.
Get Full Answer on WhatsApp