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Calculate the Income Effect on the Incremental EPS for the Following

Question 37

Multiple Choice

Calculate the income effect on the incremental EPS for the following instrument:  Convertible bonds outstanding, effective yield  of 7% and coupon rate of 6%$2,000,000 Issue date  January 1, 2019  Maturity date  December 31, 2018  Conversion rate for each $1,000 bond  20 ordinary share  Income tax rate 25%\begin{array}{|l|r|}\hline\begin{array}{l}\text { Convertible bonds outstanding, effective yield } \\\text { of } 7 \% \text { and coupon rate of } 6 \%\end{array} & \$ 2,000,000 \\\hline \text { Issue date } & \text { January 1, 2019 } \\\hline \text { Maturity date } & \text { December 31, 2018 } \\\hline \text { Conversion rate for each } \$ 1,000 \text { bond } & \text { 20 ordinary share } \\\hline \text { Income tax rate } & 25 \%\\\hline\end{array}


A) 30,000
B) 35,000
C) 90,000
D) 105,000

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