There are two companies B and D. Total contribution of capital is Rs.40 lakhs each. The proportion of equity in the total capital of company B is Rs.10 lakhs and debt is Rs.30 lakhs. While in company D, the total equity capital is Rs.40 lakhs, sourced through equity. EBIT is Rs.8 lakhs, the interest rate on debt is @ 10% and the tax rate is 30%. What is the EPS for company B?

34%

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32%

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31%

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35%

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Solution

The correct option is D
35%

As per the above furnished details, we need to calculate the EPS for company B

$Company BCompany DEquity@100 eachRs.1000000Rs.400000Loan@10 \% p.aRs.3000000 − Total CapitalRs.4000000Rs.400000EBITRs.8000000Rs.800000(-)Interest@ 10 \%Rs.3000000 − EBTRs.5000000Rs.800000(-)Tax @ 30Rs.150000Rs.240000Rs.350000Rs.560000EPS 35% 14%$

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