---
title: "EPS; total capital Rs 15,00,000"
subject: "Project Engineering"
chapter: 6
key: "semester_7/project_engineering:eps-capital-1500000-pref-loan-a74"
source: https://www.bctengineer.com/q/semester_7/project_engineering/eps-capital-1500000-pref-loan-a74
site: BCT Engineering
---

# EPS; total capital Rs 15,00,000

Project Engineering · Chapter 6: Introduction to Project Financing

- Asked in: 2074 Asoj, 2 marks
- Video: [Financial management under BU// chapter 3// calculation of EPS when 2 different EBIT amt// part 6](https://www.youtube.com/watch?v=jlRm2qOwlWs) — study circle
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_7/project_engineering/eps-capital-1500000-pref-loan-a74
- Whole chapter: https://www.bctengineer.com/md/semester_7/project_engineering/chapter-6

## Question

A company has total capital of Rs 1500000 which consists of Rs 400000 shares, Rs 200,000 preference share issued at 12% interest per year and the remaining loan issued @ 8% interest. Calculate EPS if earnings before interest and tax in a year is Rs 300,000 and tax rate is 20%.

## Short answer

Loan interest = Rs 72,000; EBT = Rs 228,000; tax at 20% = Rs 45,600; EAT = Rs 182,400; preference dividend = Rs 24,000; earnings for equity = Rs 158,400. With 4,000 shares, EPS = Rs 158,400 / 4,000 = Rs 39.60.

## Answer

#### Data

- Share capital = Rs 4,00,000; assuming face value Rs 100 per share, number of shares = 4,000
- Preference share = Rs 2,00,000 at 12%
- Loan = 15,00,000 - 4,00,000 - 2,00,000 = Rs 900,000 at 8%
- EBIT = Rs 3,00,000; tax = 20%

$$
\begin{aligned}
\text{Interest} &= 900,000 \times 8\% = 72,000\\
\text{EBT} &= 300,000 - 72,000 = 228,000\\
\text{Tax} &= 20\% \times 228,000 = 45,600\\
\text{EAT} &= 228,000 - 45,600 = 182,400\\
\text{Preference dividend} &= 200,000 \times 12\% = 24,000\\
\text{Earnings for equity} &= 182,400 - 24,000 = 158,400\\
EPS &= \frac{158,400}{4,000} = 39.60
\end{aligned}
$$

**Answer: EPS = Rs 39.60 per share** (with shares of Rs 100 each).

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. Loan is:
   A. Rs 900,000
   B. Rs 1,100,000
   C. Rs 400,000
   D. Rs 200,000
   Answer: A. 15,00,000 - 4,00,000 - 2,00,000 = 9,00,000. (Key point: Loan amount)

2. Interest on loan is:
   A. 108,000
   B. 72,000
   C. 24,000
   D. 45,600
   Answer: B. 900,000 x 8% = 72,000. (Key point: Interest)

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