1. Calculate the indifference point EBIT for the following financing options: (a) (A) Equity…

 
   

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1. Calculate the indifference point EBIT for the following financing options:

(a) (A)Equity share capital of Rs.600000 and 12% debentures of Rs.400000

(b). Equity share capital of Rs.400000, 14% preference share capital of Rs.200000 and 12% debentures of Rs.400000

[Assume a corporate tax rate of 35%. The par value of each equity share is Rs.10]