1) Determine an incremental per share effect for $0.63 preferred shares. (Round answer to 2 decimal places, e.g. 15.25.)

 2) Calculate the proceeds from the assumed exercise of 106,500 options.

 

An excerpt from the statement of financial position of Pharoah Limited follows: PHAROAH LIMITED Selected Statement of Financial Position Information At December 31, 2020 Long-term debt Shareholders' equity $0.63 cumulative, no par value, convertible preferred shares (unlimited number of shares authorized, 540,700 shares issued and outstanding) 1. 2 Notes payable, 10% 4% convertible bonds payable 6% convertible bonds payable Total long-term debt 3. Notes and Assumptions December 31, 2020 4. 5. 6. 7. 8. Common shares, no par value (8,607,900 shares authorized, 2,978,000 shares issued and outstanding) Contributed surplus Retained earnings Total shareholders' equity $5,007,000 1,990,000 2.964,000 $9,961,000 $2,703,500 27,394,000 197,300 7,339,500 $37,634,300 Options were granted/written in 2019 that give the holder the right to purchase 106.500 common shares at $9 per share. The average market price of the company's common shares during 2020 was $15 per share. The options expire in 2028 and no options were exercised in 2020. The average income tax rate is 25%. The common shares were outstanding during the entire year. Preferred dividends were not declared in 2020. Net income was $2,285,500 in 2020. No bonds or preferred shares were converted during 2020. The 4% bonds were issued in 2019 at face value. The 6% bonds were issued on June 1, 2020, at face value. Each bond has a face value of $1,000 and is convertible into 100 common shares. The convertible preferred shares were issued at the beginning of 2020. Each share of preferred is convertible into one common share.