We have outstanding 100000 equity of 10 each. For expansion
of business we need Rs.500000. which of the following option
will be beneficial for equity shareholders ? If net profit
before interest & tax is 300000 &tax rate is 40%.(1)-50000
equity sh of Rs 10 each,(2)-10% Pref Sh.. Rs 100 each,(3)-
5000 10% debentures.??????????
Answers were Sorted based on User's Feedback
Answer / shahid raza,pgdm,lbs,g.noida
It will be beneficial to issue 5000 10% debentures.
For detail... Ask me
email:- mdshahid.raza@rediffmail.com
shahid.raza37@gmail.com
Is This Answer Correct ? | 6 Yes | 1 No |
Answer / farha
the option which is benificial for equity shareholder is
issuing 5000 10% debentures because the interest on
debentures is tax free so PBIT amount becomes less for tax
on one hand.
on the other hand the number of equity shareholder not
increased remain contant 10000 eqity holders so the earning
per equity share will be maximum
Is This Answer Correct ? | 3 Yes | 0 No |
Answer / jagdish
(2)
Profit-300000
less-inter-2000
EBIT-280000
LESS-112000
PAT-168000
(1)PROFIT-300000
TAX-120000
PAT-180000
Is This Answer Correct ? | 3 Yes | 1 No |
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