Question

The company had 100,000 shares of common stock outstanding throughout the year. In addition, as of January 1, the company had issued 500 convertible bonds ($1,000 face value, 10%). The company has no other potentially dilutive securities.Net income for the year was $200,000. The income tax rate is 40%. Compute diluted earnings per share, assuming that
(1) Each bond was convertible into 40 shares of common stock and
(2) Each bond was convertible into 10 shares of common stock.



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  • CreatedApril 08, 2012
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