Sara Corporation had net inlome for the year of $720,000 and a weighted average number of common shares outstanding during the period of 250,000 shares. The company has a convertible bond issue outstanding. The bonds were issued four years ago at par ($3,000,000), carry a 7% interest rate, and are convertible into 50,000 shares of common stock. The company has a 40% tax rate. Diluted earnings per share are OA $2.68. OB. $2.82. OC. $3.10. OD. $1.98 Reset Selection

Sara Corporation had net inlome for the year of $720,000 and a weighted average number of common shares outstanding during the period of 250,000 shares. The company has a convertible bond issue outstanding. The bonds were issued four years ago at par ($3,000,000), carry a 7% interest rate, and are convertible into 50,000 shares of common stock. The company has a 40% tax rate. Diluted earnings per share are OA $2.68. OB. $2.82. OC. $3.10. OD. $1.98 Reset Selection

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Texon Corporation had 8 million shares of common stock outstanding during the current calendar year. On January 1, Texon issued ten thousand $1,000 face value, convertible bonds. Each bond is convertible into 50 shares of common stock. The bonds were issued at face amount and pay interest semiannually for 20 years. They have a stated rate of 12%. Texon had income before tax of $24 million and a net income of $18 million. The income tax rate is 25%. Texon would report the following EPS data (rounded): BASIC EPS Diluted EPS A. $ 2.25 $ 2.24 B. $ 2.25. $ N/A Antidulutive C. $2.25 $ 2.22 D. $2.25. $ 2.25 O Option A O Option B O Option C O Option D SHOW WORK THANKS
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