Homework:Week Four

Question 10, E20-6 (similar to)

Part 1 of 2

HW Score: 21.68%, 4.55 of 21 points

Points: 0 of 1

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On

January

1,

Abrat

Star Inc. had

610,000

common shares outstanding. The company issued an additional

192,000

shares on

March

1.

Abrat

Star also issued

$1,100,000

par value,

4%

nonconvertible, noncumulative preferred stock on

October

1 and declared dividends for the current quarter. On

April

30, the firm issued

$5,180,000,

9%

convertible bonds outstanding (i.e.,

$466,200

coupon interest per year) that are convertible into

75,000

shares of common stock. The firm issued all bonds at par and did not convert any during the current year. The company is subject to a

30%

effective tax rate and net income is

$6,100,000.

Requirement

Based on this information, compute basic and diluted earnings per share for the current year.

Calculate the basic earnings per share (EPS) for the current year. (Round any intermediary computations to the nearest whole number, but then round the EPS to the nearest cent, $X.XX.)

Basic EPS for the current year is $

.

Diluted EPS for the current year is $