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

Indifference Point Let the Expected EBIT be X Equation for Plan 1: [(X - 1,00,000) x 0.65 - 6,00,000] / 22500 Equation for Plan 2: [(X - 3,30,000) x 0.65] / 45000 Both equations must be equal to find out the indifference point: (X - 1,00,000) x 0.65 - 6,00,000 / 22500 = (X - 3,30,000) x 0.65 / 45000 Cross multiplication for solving equation: [0.65X - 65,000 - 6,00,000] / 22500 = [0.65X - 2,14,500] / 45000 [0.65X - 6,65,000] x 45000 = [0.65X - 2,14,500] x 22500 29250X - 29,92,50,00,000 = 14625X - 4,82,62,50,000 29250X - 14625X = 29,92,50,00,000 - 4,82,62,50,000 14625X = 25,09,87,50,000 X = 25,09,87,50,000 / 14625 X = 17,16,154 Hence, the indifference point is ₹17,16,154 .