Profit before Interest and Tax $=\mathrm{₹}8,00,000$ , Interest on $10\%$ Debentures
$=\mathrm{₹}4,00,000\left(40,00,000\times 10∕100\right)$
Profit before Tax $=$ Profit before Interest and Tax - Interest
$=8,00,000-4,00,000$
$=\mathrm{₹}4,00,000$
Tax @ $40\%=\mathrm{₹}1,60,000\left(4,00,000\times 40∕100\right)$
Profit after Tax $=$ Profit before Tax - Tax
$=4,00,000-1,60,000$
$=\mathit{₹}2,40,000$
EPS $=$ Profit after Tax/ No. of Equity Shares
$=2,40,000∕6,00,000$
$=\mathrm{₹}0.4$
(The face value of equity share is assumed to be $\mathrm{₹}10$ each. Hence, no. of equity shares is $6,00,000$ )
This clearly shows that the shareholders have lost after the issue of debentures since the EPS has decreased from $\mathrm{₹}0.50$ to $\mathrm{₹}0.40$.