A firm is considering investment in a project that requires ₹50 Lakhs. Either the firm can invest the entire amount through equity shares of ₹100 each (option A), or it can arrange 10% Bank Loan of ₹30 Lakhs and invest r
CS Executive · Financial and Strategic Management · PYQS · December 2022
A firm is considering investment in a project that requires ₹50 Lakhs. Either the firm can invest the entire amount through equity shares of ₹100 each (option A), or it can arrange 10% Bank Loan of ₹30 Lakhs and invest remaining amount equity shares of ₹100 each (option B). Assume a tax rate of 30%. The indifference point of these two options will be: (A) ₹3,50,000 (B) ₹5,00,000 (C) ₹6,00,000 (D) None of the above
Answer & Explanation:
Correct Answer: Option (B)
Official answer key: (B).
Topics: Financial Management
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