Read the following information and answer the question.

Company XYZ Ltd.
TOTAL FUND USED = 50 LAKHS

Calculate earning per share in situation II.

₹0.8

The correct answer is option 3- ₹0.8.

In this situation total fund is 50 lakhs in which 15 lakhs is debt so share capital is 35 lakhs.
Face value per share = ₹10

No of shares = 35 lakhs/10
                   = 3,50,000

Debt = 15 lakhs
Interest = 10%
Interest amount = 15,00,000 x 10/100
                         = 1,50,000

         EBIT = 5,00,000 
less: Interest = 1,50,000
         EBT = 3,50,000 (Earnings before taxes)
less: Tax = 70,000 (3,50,000 x 20/100)
         EAT 2,80,000

Earning per share = Earning after tax/No of shares
                             = 2,80,000/3,50,000
                             = 0.8