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If EPS is 0 , what will be the EBIT of the company where Variable cost is 6/per unit for 10000 units, Non-operating Fixed cost is 9000 with tax as 50% and No Preference dividend and 5000 equity share of Rs 10/- eacha.-9000b.0c.9000d.6000

Question

If EPS is 0 , what will be the EBIT of the company where Variable cost is 6/per unit for 10000 units, Non-operating Fixed cost is 9000 with tax as 50% and No Preference dividend and 5000 equity share of Rs 10/- eacha.-9000b.0c.9000d.6000

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Solution

To solve this problem, we need to understand the relationship between Earnings Per Share (EPS), Earnings Before Interest and Taxes (EBIT), variable costs, fixed costs, tax rate, and number of equity shares.

EPS is calculated as (Net Income - Preferred Dividends) / Number of Common Shares Outstanding. In this case, EPS is given as 0, there are no preferred dividends, and there are 5000 common shares outstanding. This means that the Net Income of the company is 0.

Net Income is calculated as (EBIT - Interest - Taxes). Since there is no interest mentioned in the problem, we can simplify this to (EBIT - Taxes) = 0.

We can further simplify this to EBIT = Taxes.

Taxes are calculated as EBIT * Tax Rate. In this case, the tax rate is 50%, so we can say that EBIT = 0.5 * EBIT.

This equation can only be true if EBIT = 0. So, the answer is b. 0.

This problem has been solved

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