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Q3.(i) The capital employed in a business has been finance as below:
Rs.
Equity Share Capital 6,00,000
7% Preference Share Capital 4,00,000
6% Debentures 8,00,000
Reserves & Surplus 2,00,000
The company earns a profit of Rs. 4,00,000 before interest and tax .Test it for Trading on Equity. Tax rate may be taken at 50%.
(ii) Explain the factor influencing capital structure.
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