A company is contemplating investment in a project requiring ₹72 Lakh. For the same, two options are available. Option I is 100% equity option where equity shares of face value ₹100 each will be issued at 20% premium. Op
CS Executive · Financial and Strategic Management · PYQS · December 2022
A company is contemplating investment in a project requiring ₹72 Lakh. For the same, two options are available. Option I is 100% equity option where equity shares of face value ₹100 each will be issued at 20% premium. Option II encompasses taking a bank loan of ₹50 Lakhs and raising remaining amount through equity shares at par. If the loan can be raised at 10% per annum, and applicable income tax rate is 30%, the approximate indifference point will be: (A) ₹7,98,474 (B) ₹6,98,450 (C) ₹7,89,474 (D) ₹6,89,450
Answer & Explanation:
The official key records '*'. This question is excluded from automatic grading because the source does not supply an unambiguous valid choice. Official source note: *The options for these question are incorrect as some information in these question are either missi ng or incomplete. Hence candidates may be awarded marks whether they attempted these questions or not.
Topics: Financial Management
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