Homework Answers
Solution:
Future net income = $443,400 + Interest (net of taxes) = $443,400 + ($700,000*5%*70%) = $467,900
Future outstanding common shares = 110000 + 15000 = 125000 shares
Diluted earning per share = Future net income / future outstanding common shares = $467,900 / 125000 = $3.74 per unit
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