Find the leverage ratio after restructuring

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Reference no: EM132163829

Question :

A company has 5,000 shares of Rs 100 each. It goes for capital restructuring and issues debentures for Rs 2,00,000 to buy back the shares.

If the interest rate on debentures is 10% with no tax, find:

(a) the leverage ratio after restructuring, and

(b) EPS with an EBIT of Rs 1,20,000.

Reference no: EM132163829

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