Group-2, (Dimple Yadav pgp30310, Kanika Aneja pgp30312, Khu

Not considering sinking fund deduction

Figures in $ '000
EBIT
Less: Interest @10% of $ 50 M
EBT
Less: Taxes @ 40%
EAT
No. of Equity Shares
EPS
Mkt value of equity
Book value of equity
ROE (Mkt value of equity)
ROE (Book value of equity)

Stock Plan
Bond Plan
34,000
34,000
0
5,000
34,000
29,000
13,600
11,600
20,400
17,400
7,500
4,500
2.72
3.87
125,625
75,375
336,833
202,100
16.2%
23.1%
6.1%
8.6%

Considering sinking fund deduction

Figures in $ '000
EBIT
Less: Interest @10% of $ 50 M
EBT
Less: Taxes @ 40%
Less : Sinking Fund
EAT
No. of Equity Shares
EPS
Mkt value of equity
Book value of equity
ROE (Mkt value of equity)
ROE (Book value of equity)

Stock Plan
Bond Plan
34,000
34,000
0
5,000
34,000
29,000
13,600
11,600
2,500
20,400
14,900
7,500
4,500
2.72
3.31
125,625
75,375
336,833
202,100
16.2%
19.8%
6.1%
7.4%

cost of debt (interest + sinking fund)

Total cost in %
Preference shares
Figures in $ '000
EBIT
Less: Interest
EBT
Less: Taxes
EAT
Less: Preference Dividend

9,167
18.3%

34,000
0
34,000
13,600
20,400
5,250 $10.5/ share and 500,00

Earnings available for equity shareholders

No. of Equity Shares
EPS
Mkt value of equity
Book value of equity
ROE (Mkt value of equity)
ROE (Book value of equity)

Book Value
EBIT
Less: Interest
EBT
Less: Taxes @ 40%
EAT
No. of Equity Shares
EPS
Book value of equity @ $45/share
ROE

15,150
4,500
3.37
75,375
202,100
20.1%
7.5%

34,000
34,000
13,600
20,400
5,611
3.64
252,001
8.1%

Continental Carriers

neja pgp30312, Khushbu Bhartiya pgp30315, Nidhi Verma pgp30322, Vishwas R pgp30353)

Market value per share

Book value per share

16.75
44.91 Stockholder's equity (in Balance sheet)/No.o

Breakeven point
EPS
1
EBIT
12,500
Equity financed
Debt financed
Equating EPS to find break-even point
EBIT(1-T) / 7500
=
{(EBIT - Int )*(1-t)}/4500
Leverage is favourable from EBIT $12.5 million onwards

Breakeven point
EPS
1.83
EBIT
22,916
Equity financed
Debt financed
Equating EPS to find break-even point
EBIT(1-T) / 7500
=
[{(EBIT - Int )*(1-t)} - Sinking Fund]/4500

Leverage is favourable from EBIT $22.9 million onwards. Below $22.9 m EBIT , EPS highe

0.5/ share and 500,000 shares

pgp30322, Vishwas R pgp30353)

tockholder's equity (in Balance sheet)/No.of shares outstanding

)*(1-t)}/4500

on onwards

)*(1-t)} - Sinking Fund]/4500

on onwards. Below $22.9 m EBIT , EPS higher for equity finance (stock) plan .