Question: Please make sure to explain the steps you take to solve this question Stated Facts: There were 100,000 shares outstanding on January 1, 2021. 10,000

Stated Facts: There were 100,000 shares outstanding on January 1, 2021. 10,000 treasury shares were purchased on July 1, 2021. 20,000 new shares were issued on October 1, 2021. Two for one stock split was declared on December 1, 2021. Net Income $600,000. A Preferred Stock - $1,000,000 $100 par . Each preferred stock is converted into 5 shares of Common Stock 10% Cumulative . B. Preferred Stock - $500,000. $100 par Non convertible 8% cumulative . . C. Convertible bonds 12% Issued April 1, 2021 $2,000,000 Each bond $1,000 Each bond is convertible into 50 shares of Common Stock . At par . D. Convertible bonds 8% Issued February 15, 2015 At par = 1,000,000 Each bond $1,000 Each bond is convertible into 40 shares of Common Stock . . E.Outstanding 100,000 Stock Options Issued January 1 2018 Exercise price $30 Market price $40 . F. Outstanding 50,000 Stock Options Issued July 1, 2019 Excrcise price $45 Market price $40 . C. Convertible bonds 12% Issued April 1, 2021 At par = $2,000,000 Each bond $1,000. Each bond is convertible into 50 shares of Common Stock . . . . D. Convertible bonds 8% Issued February 15, 2015 At par = 1,000,000 Each bond $1,000 Each bond is convertible into 40 shares of Common Stock ho . E. Outstanding 100,000 Stock Options Issued January 1, 2018 Exercise price $30 Market price $40 . . F. Outstanding 50,000 Stock Options Issued July 1, 2019 Exercise price $45 Market price $40 . . G. No dividends were declared in 2021 and company's tax rate is 40%. Required: 1. Calculate the base EPS, 2. Calculate the dilution indexes(incremental Per share Effect) for each of the situations A-F. 3 Rank indexes from lowest to highest. Calculate the diluted EPS
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
