5. A company is expecting EBIT of Rs. 5,00,000 per annum on investment of Rs. 10,00,000. Company is in need of Rs. 8,00,000 for its expansion activities. Company can raise this amount by either equity shares capital or 12% preference share capital or 10% debentures. The company is considering the following financing patterns: a. 10,00,000 through issue of Equity Shares at par; b. 5,00,000 by issue of Equity Share Capital and remaining 5,00,000 by issue of Debentures; c. 5,00,000 through Equity Shares and 2,50,000 through 12% Preference Share Capital and remaining 2,50,000 through 10% Debentures.; d. 5,00,000 through Debt and 2,50,000 through Equity Shares and remaining 2,50,000 through 12% Preference Share Capital. Find out the best financing mix assuming 50% tax rate.

Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter18: Cost-volume-profit Analysis (cvp)
Section: Chapter Questions
Problem 2R: Open the file CVP from the website for this book at cengagebrain.com. Enter the formulas where...
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HRM ASSIGNMENT- MBA I| SEM
POF Entrepreneurship_MBA II Sem.pd x
PDE Financial Management - MBA II X
+
O File | C:/Users/ANIKET%20PATWA/Downloads/Financial%20Management%20-%20MBA%2011%20Sem%20.pdf
(D Page view A Read aloud
V Draw
y Highlight
2
of 2
Erase
5.
A company is expecting EBIT of Rs. 5,00,000 per annum on investment of Rs.
10,00,000. Company is in need of Rs. 8,00,000 for its expansion activities. Company can
raise this amount by either equity shares capital or 12% preference share capital or 10%
debentures. The company is considering the following financing patterns:
a. 10,00,000 through issue of Equity Shares at par;
b. 5,00,000 by issue of Equity Share Capital and remaining 5,00,000 by issue of
Debentures;
c. 5,00,000 through Equity Shares and 2,50,000 through 12% Preference Share Capital
and remaining 2,50,000 through 10% Debentures.;
d. 5,00,000 through Debt and 2,50,000 through Equity Shares and remaining 2,50,000
through 12% Preference Share Capital.
Find out the best financing mix assuming 50% tax rate.
15:57
O Type here to search
a 4)) ENG
25
03-05-2021
Transcribed Image Text:HRM ASSIGNMENT- MBA I| SEM POF Entrepreneurship_MBA II Sem.pd x PDE Financial Management - MBA II X + O File | C:/Users/ANIKET%20PATWA/Downloads/Financial%20Management%20-%20MBA%2011%20Sem%20.pdf (D Page view A Read aloud V Draw y Highlight 2 of 2 Erase 5. A company is expecting EBIT of Rs. 5,00,000 per annum on investment of Rs. 10,00,000. Company is in need of Rs. 8,00,000 for its expansion activities. Company can raise this amount by either equity shares capital or 12% preference share capital or 10% debentures. The company is considering the following financing patterns: a. 10,00,000 through issue of Equity Shares at par; b. 5,00,000 by issue of Equity Share Capital and remaining 5,00,000 by issue of Debentures; c. 5,00,000 through Equity Shares and 2,50,000 through 12% Preference Share Capital and remaining 2,50,000 through 10% Debentures.; d. 5,00,000 through Debt and 2,50,000 through Equity Shares and remaining 2,50,000 through 12% Preference Share Capital. Find out the best financing mix assuming 50% tax rate. 15:57 O Type here to search a 4)) ENG 25 03-05-2021
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