Question 2:During 20X6, ZZZ reported net income of $115,600 and had 200,000shares of common stock outstanding for the entire year. ZZZ had 1,000shares of 10%, $100 par convertible preferred stock, convertible into 40shares each, outstanding for the entire year. ZZZ also had 600, 7%, $1,000par value convertible bonds, convertible into 100 shares each, outstandingfor the entire year. Finally, ZZZ had 10,000 stock options outstandingduring the year. Each option is convertible into one share of stock at $15per share. The average market price of the stock for the year was $20.(Assume a 40% tax rate.)i. Compute the 20X6 basic earnings per share [4]ii. Calculate the 20X6 diluted EPS. [6]

earning before interest and tax (EBIT) =$115600 tax rate = 40% shares outstanding = 200000…

Answered: Question 2: During 20X6, ZZZ reported…

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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