Untitled-29

Capital Structure Theories^317

or





 




 = ¥ -

X = Rs 4,80,000

Confirmation table

Equity financing Equity+debt+

Preference financing

EBIT Rs 4,80,000 Rs 4,80,000

Less interest - 1,00,000

Earning before taxes 4,80,000 3,80,000

Less taxes 1,68,000 1,33,000

Earnings after tax 3,12,000 2,47,000

Less dividends including dividend

tax on preference shares - 1,43,000

Earnings available for equity holders 3,12,000 1,04,000

Number of equity shares 30,000 10,000

EPS 10.4 10.4

(iv)

 &

- ,  +

&

 ,  - - -

=

or



   

  

 - 

= - - -

or X = Rs 5,50,000

Confirmation table

Equity financing Equity + Preference

+ Debentures financing

EBIT Rs 5,50,000 Rs 5,50,000

Less interest 1,00,000 80,000

Earning before taxes 4,50,000 4,70,000

Less taxes 1,57,500 1,64,500

Earnings after tax 2,92,500 3,05,500