Question: The company had 100 000 shares of common stock outstanding throughout the year

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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