To calculate the EPS (Earnings Per Share) for both financial plans A and B, we follow these steps:

Formula for EPS:

$\text{EPS} = \frac{\text{Net Income}}{\text{Number of Equity Shares}}$

To determine the net income:

1. Revenue (Sales) = Output (Units) × Selling Price per Unit
2. Total Variable Cost = Output (Units) × Variable Cost per Unit
3. Total Cost = Fixed Cost + Total Variable Cost + Interest Expense
4. Operating Profit (EBIT) = Revenue - Total Cost (excluding Interest)
5. Net Income (Profit) = Operating Profit (EBIT) - Interest Expense

Plan A:

1. Revenue: $15,000 \text{ units} \times 75 = 11,25,000$

2. Total Variable Cost: $15,000 \text{ units} \times 10 = 1,50,000$

3. Total Cost (without interest): $\text{Fixed Cost} + \text{Total Variable Cost} = 1,00,000 + 1,50,000 = 2,50,000$

4. EBIT (Operating Profit): $\text{Revenue} - \text{Total Cost (without interest)} = 11,25,000 - 2,50,000 = 8,75,000$

5. Net Income: $\text{EBIT} - \text{Interest Expense} = 8,75,000 - 75,000 = 8,00,000$

6. EPS for Plan A: $\frac{8,00,000}{10,000} = 80$

Plan B:

1. Revenue: $10,000 \text{ units} \times 90 = 9,00,000$

2. Total Variable Cost: $10,000 \text{ units} \times 10 = 1,00,000$

3. Total Cost (without interest): $\text{Fixed Cost} + \text{Total Variable Cost} = 2,00,000 + 1,00,000 = 3,00,000$

4. EBIT (Operating Profit): $\text{Revenue} - \text{Total Cost (without interest)} = 9,00,000 - 3,00,000 = 6,00,000$

5. Net Income: $\text{EBIT} - \text{Interest Expense} = 6,00,000 - 75,000 = 5,25,000$

6. EPS for Plan B: $\frac{5,25,000}{15,000} = 35$

Final EPS values:

• Plan A EPS: 80
• Plan B EPS: 35

Would you like further details or clarifications? Here are a few questions you might want to explore:

1. What impact does increasing the fixed cost have on EPS?
2. How would changes in the interest expense affect the profitability?
3. If variable costs increase, what is the effect on EPS for both plans?
4. How does output level (units produced) influence the EPS in different scenarios?
5. What are the financial risks associated with a higher fixed cost in Plan B?

Tip: Always assess the breakeven point to understand how changes in cost structure affect profitability.