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A company has EBIT ₹20 lakh, 10% debt ₹50 lakh, tax rate 30%, equity shares 1 lakh outstanding (face ₹10). EPS is:
A₹7
B₹20
C₹14
D₹10.5
Answer & Solution
Correct answer: D. ₹10.5
1. Interest = 10% × 50 lakh = ₹5 lakh.
2. PBT = 20 − 5 = ₹15 lakh; PAT = 15 × (1−0.30) = ₹10.5 lakh.
3. EPS = PAT / shares = 10.5 lakh / 1 lakh = ₹10.5.
_Source: ICAI BoS CA Inter Paper 6A, Ch 5 "Financing Decisions — Capital Structure", §3_
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