QUESTION 3 Plan l Plan 2 Plan 3 Plan 4 EBIT sl00090000100000000 Less: Interest Expense 20000360000 120000240000 EBT 88006400008800076000 Less: Tax(@ 30% 264000 192000 64000 228000 Earnings after Tax 616000448000 616000 532000 Less. Preference dividends 0210000 Earnings Available for Distribution 616000 448000 406000532000 to Ordinary shareholders No of Ordinary Shares Issued 450000300003000003750000 EPS 13.7 14.9 cents 13.5 cents 14.2 cents Plans i and 2 (x-1)(T),PD12(x-12)(.T)PD N (X-120000.3)-0_(xX-360000(-03)-0 4500000 3000000 0.7X-840000.7X-252000 4.5 2.1X-252000=3.15X-1134000 1.05X=-882000 X=$840000 EPS=11.2 centsSeptember 2003 QUESTION 3 a) Plan 1 Plan 2 Plan 3 Plan 4 EBIT $1 000 000 $1 000 000 $1 000 000 $1 000 000 Less: Interest Expense 120 000 360 000 120 000 240 000 EBT 880 000 640 000 880 000 760 000 Less: Tax @ 30% 264 000 192 000 264 000 228 000 Earnings After Tax 616 000 448 000 616 000 532 000 Less: Preference Dividends 0 0 210 000 0 Earnings Available for Distribution to Ordinary Shareholders 616 000 448 000 406 000 532 000  No. of Ordinary Shares Issued 4 500 000 3 000 000 3 000 000 3 750 000 EPS 13.7 cents 14.9 cents 13.5 cents 14.2 cents b) Plans 1 and 2 ( )( ) ( )( ) ( )( ) ( )( ) EPS =11.2 cents X = $840 000 -1.05X = - 882 000 2.1X - 252 000 = 3.15X -1134 000 3 0.7X - 252 000 = 4.5 0.7X - 84 000 3 000 000 X - 360 000 1- 0.3 - 0 = 4 500 000 X -120 000 1- 0.3 - 0 N X - I 1- T - PD = N X - I 1- T - PD 2 2 2 1 1 1