A company has basic EPS of $1.29 per share. If the tax rate is 30%, which of...
A company has basic EPS of $1.29 per share. If the tax rate is 30%, which of the following securities would be dilutive?
- Cumulative 8%, $50 par preferred stock
- Ten (10%) percent convertible bonds, with each $1,000 bond convertible into 20 shares of common stock.
- Seven (7%) percent convertible bonds, with each $1,000 bond convertible into 40 shares of common stock.
- Six (6%) percent,$100 par cumulative convertible preferred stock with each preferred share convertible into 4 shares of common stock.
Homework Answers
| Option C is the answer | ||
|
The dilutive eps in case of option C would be = [(1000*7%) - 30%]/40 = (70 - 21)/40 = 1.23 |
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