Determine the indifference point of EBIT level between the financing plans: (1) issue 80,000 equity shares at ₹ 50 each; (2) issue 15 percent bonds. The company already have 2,00,000 equity shares and 10% coupon-bearing bonds amounting to ₹8,00,000. The company is subject to a 35 percent rate of tax. Which financing plan will you prefer if the expected EBIT level is lying below this indifference level ? Also show graphically.Determine the indifference point of EBIT level between the financing plans: (1) issue 80,000 equity shares at ₹ 50 each; (2) issue 15 percent bonds. The company already have 2,00,000 equity shares and 10% coupon-bearing bonds amounting to ₹8,00,000. The company is subject to a 35 percent rate of tax. Which financing plan will you prefer if the expected EBIT level is lying below this indifference level ? Also show graphically.
Determine the indifference point of EBIT level between the financing plans: (1) issue 80,000 equity shares at ₹ 50 each; (2) issue 15 percent bonds. The company already have 2,00,000 equity shares and 10% coupon-bearing bonds amounting to ₹8,00,000. The company is subject to a 35 percent rate of tax. Which financing plan will you prefer if the expected EBIT level is lying below this indifference level ? Also show graphically.Determine the indifference point of EBIT level between the financing plans: (1) issue 80,000 equity shares at ₹ 50 each; (2) issue 15 percent bonds. The company already have 2,00,000 equity shares and 10% coupon-bearing bonds amounting to ₹8,00,000. The company is subject to a 35 percent rate of tax. Which financing plan will you prefer if the expected EBIT level is lying below this indifference level ? Also show graphically.
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