. The modern chemical ltd. Require rs.25,00,000 for a new plant. The plant is expected to yield EBIT of rs.500,000. It has three alternative to finance the project by raising debt of rs.250,000 or...

. The modern chemical ltd. Require rs.25,00,000 for a new plant. The plant is expected to yield EBIT of rs.500,000. It has three alternative to finance the project by raising debt of rs.250,000 or rs.10,00,000 or rs.15,00,000 and the balance in each case by issuing equity shares. The company share is currently trading at rs.180 but is expected to fall to rs.120 in case the funds are borrowed in excess of rs.10,00,000. The funds can be borrowed at the rate of 10% up to rs.250,000 at 15% over rs.250,000 and up to rs.10,00,000 and 20% over rs.10,00,000 the tax rate applicable to the company is 30%.

REQUIRED: WHICH FORM OF FINANCING SHOULD THE COMPANY CHOOSE?