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CS Executive · Corporate Accounting and Financial Management · Operational Approach to Financial Decision

Using the data of Asha Ltd (Plan A: 30,000 shares, no interest; Plan B: 20,000 shares and interest Rs 1,00,000; tax 30%), what is the EPS under Plan B if EBIT is Rs 5,00,000?

EPS under Plan B is Rs 14. EBIT of Rs 5,00,000 less interest of Rs 1,00,000 gives Rs 4,00,000 before tax; after 30% tax, profit is Rs 2,80,000, divided by 20,000 shares.

  1. ARs 14.00Correct
  2. BRs 10.00
  3. CRs 20.00
  4. DRs 8.40

Explanation

PBT = 5,00,000 - 1,00,000 = 4,00,000. Tax at 30% = 1,20,000, so PAT = 2,80,000. EPS = 2,80,000/20,000 = Rs 14. Rs 20 ignores tax; Rs 10 ignores interest-based share count error.

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