Calculate the Income Effect on the Incremental EPS for the Following

Calculate the income effect on the incremental EPS for the following instrument: $\begin{array}{|l|r|}\hline\text { Face value of } 10,000 \text { preferred shares with } & \\\text { dividend rate of } 5 \% & \$ 5,000,000 \\\hline \text { Conversion rate for each preferred share } & 5 \text { ordinary shares } \\\hline \text { Income tax rate } & 30 \%\\\hline\end{array}$

A) $1.00
B) $75,000
C) $175,000
D) $250,000

Correct Answer:

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