Sales and earnings before interest and taxes (EBIT) for Ramswaroop Co. Ltd. during 2013 were ₹17,50,000 and ₹4,50,000 respectively. During 2013, interest expenses were ₹4,000 and preference dividends were ₹10,000. These

Sales and earnings before interest and taxes (EBIT) for Ramswaroop Co. Ltd. during 2013 were ₹17,50,000 and ₹4,50,000 respectively. During 2013, interest expenses were ₹4,000 and preference dividends were ₹10,000. These fixed charges are expected to continue during 2014. An expansion is planned which will require ₹1,75,000 and is expected to increase EBIT by ₹1,00,000 to ₹5,50,000. The company is considering the following financing alternatives : Alt.-1 Issue 5,000 shares of common stock to net the firm ₹35 per share. The firm currently has 40,000 shares of common stock outstanding. Alt.-2 Issue ₹1,75,000 of fifteen year bonds at 8%. Sinking fund payments on these bonds commence in 2013. Alt.-3 Issue ₹1,75,000 of 8.5% preferred stock. Assume a 50% tax rate. You are required to calculate the EPS for 2014 at the expected earnings before interest and taxes level of ₹5,50,000 for each financing alternative.