Padmavati Corporation plans to enhance assets by 50% to support the expansion plan. The management of Padmavati Corporation has alternatives available to finance the expansion project: either a 12% debt issue or an issue

Padmavati Corporation plans to enhance assets by 50% to support the expansion plan. The management of Padmavati Corporation has alternatives available to finance the expansion project: either a 12% debt issue or an issue of equity shares with premium at the rate of 20%. If the expansion plan is implemented, it would result into sales of ₹8 crore. The total cost excluding interest would be maintained at the level of 90%. The Statement of Financial Position and Income Statement of Padmavati Corporation are reproduced hereunder. Statement of Financial Position as on 31st December, 2018 Particulars Amount (₹) Equity and Liabilities: 10 lakh Equity shares 1,00,00,000 Retained earnings 60,00,000 11% Debentures 40,00,000 Assets: 2,00,00,000 Income Statement for the year ended 31st December, 2018 Particulars Amount (₹) Sales 6,00,00,000 Total cost (excluding interest) 5,40,00,000 Interest 4,40,000 Tax rate 50% Earnings after tax 27,80,000 The market analysts, are of the view that, if the expansion is financed by debt, then Price-earnings ratio will fall from 7.50 to 5.00. You are required to calculate: (ii) Market price per share for each alternative of financing.