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The present capital structure of Abdullah's Co. Itd. is: SOURCES OF FUNDS 3000, Equity shares...

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Accounting

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The present capital structure of Abdullah's Co. Itd. is: SOURCES OF FUNDS 3000, Equity shares of $100 each AMOUNT $ $3,00,000 5000, 10% Debentures of $100 each $5,00,000 $8,00,000 The present earning of the company before interest & taxes are 10% of the invested capital every year. The company is in need of $ 2,00,000 for purchasing a new equipment and it is estimated that additional investment will also produce 10% earning before interest & taxes every year. The company has asked your advice as to whether the requisite amount be obtained in the form of 10% Debenture or equity shares of $100 each to be issued at par. Examine the problem in all its bearing and advice firm if the corporate tax rate is 50%. Time left 1:28:59 -1080- acer

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