1 Incremental basis

Particulars
Increased EBIT
Less: Interest @10% of Rs. 500 lacs
EBT
Less: Taxes @ 40%
EAT
No. of Equity Shares
EPS
Annual Sinking fund

Stock Plan Bond Plan

8400
8400
5000
8400
3400
3360
1360
5040
2040
7500
4500
0.672
0.453
2500

2 Absolute basis
Particulars
EBIT
Less: Interest @10% of Rs. 500 lacs
EBT
Less: Taxes @ 40%
EAT
No. of Equity Shares
EPS
Annual Sinking fund

Stock Plan Bond Plan

34000
34000
0
5000
34000
29000
13600
11600
20400
17400
7500
4500
2.72
3.87
2520

3 Preference plan
Particulars
EBIT
Less: Interest
EBT
Less: Taxes
EAT
Less: Preference Dividend
Earnings available for ESH
No. of Equity Shares
EPS

Preference plan
34000
0
34000
13600
20400
5250
15150
4500
3.37

4 New cost of Debt = 10% + 8% = 18%

Particulars
Stock Plan Bond Plan
EBIT
34000
24000
Less: Interest @18% of Rs. 500 lacs
9000
EBT
34000
15000
Less: Taxes @ 40%
13600
6000
EAT
20400
9000

No. of Equity Shares

EPS
Annual Sinking fund

7500
2.72

4500
2.00
2500

6
('000 $)
post tax benefit from acquistion
Less: additional dividend paid
Incremental benefit to CCI

50
45
5

Book Value
Particulars
EBIT
Less: Interest @18% of Rs. 500 lacs
EBT
Less: Taxes @ 40%
EAT
No. of Equity Shares
EPS
Annual Sinking fund

Stock Plan Bond Plan

34000
24000
9000
34000
15000
13600
6000
20400
9000
5611
4500
3.64
2.00
2500