XY Ltd. wanted to launch a new product line. For this, they invested huge amounts of money on research and development programme. Identify type of financial decision highlighted above.

Question

‘Ratan Ltd.’ and ‘Lara Ltd.’ are two companies with each having a capital employed of Rs. 20,00,000. ‘Ratan Ltd.’ had raised funds by issuing shares whereas ‘Lara Ltd.’s capital has 60% equity and 40% debt (8% debentures). Both have ROI of 10% and tax rate is 40%. State with reason which company will give a better return to shareholders.

Answer 1

The correct option is (B) :Working Capital decision

XY Ltd. wanted to launch a new product line. For this, they invested huge amounts of money on research and development programme. Identify type of financial decision highlighted above.

The Correct Option is B

Solution and Explanation

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