Novak Inc. had net income for the current year ending December 31, 2023 of $953,780. During...

Transcribed Image Text:

Novak Inc. had net income for the current year ending December 31, 2023 of $953,780. During the entire year, there were 502,000 common shares outstanding. The company had two classes of preferred shares outstanding: the Class A preferred shares were $2.09 cumulative shares of which 12,000 were outstanding, and were convertible to common shares at a rate of 1:1. There were 103,000 $6.09 Class B non-cumulative preferred shares outstanding that were also convertible at a rate of 1:1. Novak had outstanding a $1,000,000, 6% bond issued at par in 2012 that was convertible to 21,000 common shares. The company also had outstanding a $1,000,000, 4% bond issued at par in 2013 that was convertible to 26,000 common shares. No dividends were declared or paid this year. Novak's tax rate is 37%. Determine an incremental per share effect for the 2012 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.) Potentially dilutive security 2012 Bonds Incremental Numerator Effect $ Incremental Denominator Effect Calculate the after-tax interest paid on the 2010 bonds. After-tax interest on 2010 bonds converted tA $ EPS Determine an incremental per share effect for 2010 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.) Potentially dilutive security 8% Bonds Incremental Numerator Effect $ Incremental Denominator Effect EPS Determine an incremental per share effect for Class A preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.) Potentially dilutive security Incremental Numerator Effect Class A preferred shares Incremental Denominator Effect EPS Determine an incremental per share effect for Class B preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.) Potentially dilutive security Incremental Numerator Effect Incremental Denominator Effect EPS Class B preferred shares Rank the potentially dilutive securities from most dilutive to least dilutive. 2009 bonds 2010 bonds Class A preferred shares Class B preferred shares +A Novak Inc. had net income for the current year ending December 31, 2023 of $953,780. During the entire year, there were 502,000 common shares outstanding. The company had two classes of preferred shares outstanding: the Class A preferred shares were $2.09 cumulative shares of which 12,000 were outstanding, and were convertible to common shares at a rate of 1:1. There were 103,000 $6.09 Class B non-cumulative preferred shares outstanding that were also convertible at a rate of 1:1. Novak had outstanding a $1,000,000, 6% bond issued at par in 2012 that was convertible to 21,000 common shares. The company also had outstanding a $1,000,000, 4% bond issued at par in 2013 that was convertible to 26,000 common shares. No dividends were declared or paid this year. Novak's tax rate is 37%. Determine an incremental per share effect for the 2012 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.) Potentially dilutive security 2012 Bonds Incremental Numerator Effect $ Incremental Denominator Effect Calculate the after-tax interest paid on the 2010 bonds. After-tax interest on 2010 bonds converted tA $ EPS Determine an incremental per share effect for 2010 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.) Potentially dilutive security 8% Bonds Incremental Numerator Effect $ Incremental Denominator Effect EPS Determine an incremental per share effect for Class A preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.) Potentially dilutive security Incremental Numerator Effect Class A preferred shares Incremental Denominator Effect EPS Determine an incremental per share effect for Class B preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.) Potentially dilutive security Incremental Numerator Effect Incremental Denominator Effect EPS Class B preferred shares Rank the potentially dilutive securities from most dilutive to least dilutive. 2009 bonds 2010 bonds Class A preferred shares Class B preferred shares +A