ZBB LTD NEEDS 500000 FOR CONSTRUCTION

THE COMPANY CAN ISSUE 50000 EQUITY SHARES

THEY CAN ISSUE 25000 EQUITY SHARES AT 10 PER SHARE
THEY CAN ISSUE 25000 EQUITY SHARES AT 10 PER SHARE

IF ZBB'S EBIT ARE 10000 20000, 40000 60000 AND 100,000

WHICH PLAN WOULD YOU RECOMMEND AND WHY ?
OF A NEW PLANT. THE FOLLOWING THREE FINANCING PLANS ARE

AT 10 PER SHARE
AND 2500 BONDS WITH FACE VALUE OF 100 EACH AT A COUPON
AND 2500 PREFERENCE SHARES AT 100 PER SHARE WITH 8% DIVIDEND

WHAT ARE THE EPS UNDER EACH PLAN ? ASSUMING A CORPORATE TAX RATE OF
FEASIBLE

RATE OF 8%

50%
GENTRY MOTORS HAS AN EBIT OF 40000 PAYS A CORPORATE TAX
IT HAS 600000 EQUITY SHARES THE BOOK VALUE PER
ARE PAID OUT AS DIVIDENDS THE DEBT CONSISTS OF
WHAT IS GENTRYS EPS AND VALUE PER SHARE
IF IT INCREASES ITS DEBT BY 8000000 TO 1 CRORE USING THE NEW DEBT TO BUY BACK
IF EBIT REMAINS CONSTANT SHOULD IT CHANGE ITS CAPITAL STRUCTURE ?
OF 35% AND HAS DEBT OF 2,000,000.00
EQUITY SHARE IS INR 10 . SINCE GENTRYS PRODUCT MARKETS ARE STABLE
PERPETUAL BONDS

AND RETIRE SOME OF ITS SHARES AT CURRENT PRICE ITS COUPON RATE ON ITS DEBT
THE DEBT HAS A COUPON RATE OF 10% AND THE COST OF EQUITY IS 15%
AND THE COMPANY EXPECTS ZERO GROWTH ALL EARNINGS

WILL RISE TO 12% AND ITS COST OF EQUITY TO 17%