The Capital Structure of a company XYZ Ltd is as under 12 Debt Rs 100 Crores Equity share Capit...........

Finance( Revenue Account ) Others

The Capital Structure of a company XYZ Ltd. is as under:

12% Debt: Rs. 100 Crores

Equity share Capital: Rs. 100 Crores

(10,00,000 shares @10/- each)

9% Preference Share Capital: Rs. 100 Crores

Tax Rate: 35%

The financial Break-Even Point will be:

Rs. 25.85 crores

Rs. 29 crores

Rs. 30 crores

None of the above

Financial Break-Even point is that level of EBIT at which EPS is zero. It is equal to the Company’s Interest + Preference Dividend but before Taxes.

Financial Break-Even Point = (Interest) + (Preference Dividend/1-t)

= (12 crores) + (9 crores/1-.35) = Rs. 25.85 crores

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