From the following information, Calculate EPS of the following company.
Total funds to be raised = ₹30 lakhs
Interest rate on debt = 10% p.a.
Face value of equity shares = ₹10 each
Tax rate = 30%
EBIT= ₹2 lakhs
Amount of loan = ₹10 lakhs
Answer & explanation
Correct answer: option 1
The correct answer is option 1- ₹0.35.
| Particulars | Amount | |
| EBIT | 2,00,000 | |
| Less: | Interest on loan (10,00,000 x 10/100) | 1,00,000 |
| EBT | 1,00,000 | |
| Less | Tax (1,00,000 x 30/100) | 30,000 |
| EAT | 70,000 |
Total fund = 30,00,000
Loan = 10,00,000
Remaining = 30,00,000 - 10,00,000
= ₹20,00,000
Share value = ₹20,00,000
Per value of a share = 10
Total no of shares = 20,00,000/10
= 2,00,000
EPS = EAT/Total no of shares
= 70,000/2,00,000
= ₹0.35