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Calculate the Share Effect on the Incremental EPS for the Following

Question 59

Multiple Choice

Calculate the share effect on the incremental EPS for the following instrument:  Convertible bonds outstanding, yield of 5% and  coupon rate of 6%$2,000,000 Issue date  January 1,2013 Maturity date  December 31,2020 Conversion rate for each $1,000 bond 40 ordinary shares  Income tax rate 25%\begin{array}{l}\begin{array} {| l | r |} \hline\text { Convertible bonds outstanding, yield of } 5 \% \text { and }\\ \text { coupon rate of } 6 \% & \$ 2,000,000 \\\hline \text { Issue date } & \text { January } 1,2013 \\\hline \text { Maturity date } & \text { December } 31,2020 \\\hline \text { Conversion rate for each } \$ 1,000 \text { bond } & 40 \text { ordinary shares } \\\hline \text { Income tax rate } & 25 \% \\\hline\end{array}\end{array}


A) 0.63
B) 1.88
C) 75,000
D) 80,000

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