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Question
The Dunlop Corporation reported basic EPS of $3.50 for the year ended December 31, 2011; the denominator used in the basic EPS calculation was 360,000 shares. Dunlop's marginal income tax rate is 40%. Dunlap had the following convertible securities outstanding during the entire year:
8% convertible preferred stock with a total par value of $1,000,000; the preferred stock is convertible into 22,000 shares of common stock.
10% convertible bonds with a total par value of $6,000,000; the convertible bonds are convertible into 120,000 shares of common stock.
What is the diluted EPS? (Hint: First test each security separately for dilution.)
Answer
This answer is hidden. It contains 132 characters.
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