Mr. A is running a successful business. Mr. A is the owner of  V M L cement Ltd. Mr. A decided to expand his business by acquiring a Steel Factory. This required an investment of Rs 60 crores. To seek advice on this matter, he called his financial advisor Mr. B who advised him about the judicious mix of equity (40%) and Debt(60%). Employing more cheaper debt may enhance the EPS. Mr. B also suggested he take a loan from financial institutions as the cost of raising funds from financial institutions is low. Though this will increase the financial risk will also raise the return to equity shareholders. He also appraised him that the issue of debt will not dilute the control of equity shareholders. At the same time, the interest on the loan is a tax-deductible expense for the computation of tax liability. After due deliberations with Mr. B; Mr. A decided to raise funds from a financial institution.