The capital structure of Fin Ltd. purely consists of Equity Share Capital of 20,00,000 consisting of share of 10 each. Its EBIT for the previous year was ₹3,00,000. Now it is planning to expands its business operations for which additional fund of ₹10,00,000 for replacement of old machines with modern machinery was needed. The company plans to raise the funds by issuing 10% Debentures of ₹100 each. Assuming the return on investment of the company remain unchanged, what will be the EPS if 10% Debentures of ₹10,00,000 are issued and tax rate is 40%.

₹1.05

The correct answer is option (2) : ₹1.05