Rise Ltd., a listed company having registered office in Delhi, has proposed two financial plans. Details of the same are given below: Sources of funds Plan - 1 Plan - 2 Equity shares of ₹100 each ₹22,50,000 ₹45,00,000 12

EBIT-EPS co-ordinates for each financial plan Plan-1 Plan-2 Interest on debentures ₹1,00,000 ₹3,30,000 Dividend on preference shares (Before taxes 600000/(1-0.35)) ₹9,23,077 NIL Total Fixed Charges ₹10,23,077 ₹3,30,000 Calculation of EPS at Expected EBIT ₹25,00,000: Particulars Plan-1 Plan-2 Expected EBIT (₹) 25,00,000 25,00,000 Less: Interest on Debentures (₹) 1,00,000 3,30,000 Equity before tax (₹) 24,00,000 21,70,000 Less: Taxes (35%) (₹) 8,40,000 7,59,500 Earnings after tax (₹) 15,60,000 14,10,500 Less: Pref. Share dividend (₹) 6,00,000 NIL Earning for equity shares (₹) 9,60,000 14,10,500 Number of shares (Equity shares of ₹100 each) 22,500 45,000 EPS (₹) 42.67 31.34 Co-ordinates: EBIT financial plan EPS financial plan Plan-1 Plan-2 Plan-1 Plan-2 Lower (one) (Financial Break-even Point) 10,23,077 3,30,000 Zero Zero Higher (two) (Expected EBIT) 25,00,000 25,00,000 42.67 31.34