Company B had net income for the fiscal year ended December 31, 2020 of $5 million. There were 500,000 common shares outstanding throughout 2020. The average market price of the common shares for the entire fiscal year was $50. Company tax rate was 25% for 2020. Company B had the following potential common shares outstanding during 2020: • Options to buy 100,000 common shares at $45 per share. • 100,000 convertible preferred shares entitled to a cumulative dividend of $10 per share. Each preferred share is convertible into 1.5 common shares. • 4% convertible bonds with a principal amount of $30 million, issued at par. Each $1,000 bond is convertible into 25 common shares. For the fiscal year ended December 31, 2020, what is the basic and diluted EPS using IFRS?

Company B had net income for the fiscal year ended December 31, 2020 of $5 million. There were 500,000 common shares outstanding throughout 2020. The average market price of the common shares for the entire fiscal year was $50. Company tax rate was 25% for 2020. Company B had the following potential common shares outstanding during 2020: • Options to buy 100,000 common shares at $45 per share. • 100,000 convertible preferred shares entitled to a cumulative dividend of $10 per share. Each preferred share is convertible into 1.5 common shares. • 4% convertible bonds with a principal amount of $30 million, issued at par. Each $1,000 bond is convertible into 25 common shares. For the fiscal year ended December 31, 2020, what is the basic and diluted EPS using IFRS?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Company B had net income for the fiscal year ended December 31, 2020 of $5
million. There were 500,000 common shares outstanding throughout 2020. The
average market price of the common shares for the entire fiscal year was $50.
Company tax rate was 25% for 2020.
Company B had the following potential common shares outstanding during 2020:
• Options to buy 100,000 common shares at $45 per share.
• 100,000 convertible preferred shares entitled to a cumulative dividend of
$10 per share. Each preferred share is convertible into 1.5 common shares.
• 4% convertible bonds with a principal amount of $30 million, issued at par.
Each $1,000 bond is convertible into 25 common shares.
For the fiscal year ended December 31, 2020, what is the basic and diluted EPS
using IFRS?

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