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Calculate the Income Effect on the Incremental EPS for the Following

Question 38

Multiple Choice

Calculate the income effect on the incremental EPS for the following instrument: Convertible bonds outstanding, yield of 6% and coupon rate of 6%
$2,000,000
Issue date
January 1, 2021
Maturity date
December 31, 2028
Conversion rate for each $1,000 bond
20 ordinary shares
Income tax rate
25%


A) 0.75
B) 2.25
C) 40,000
D) 90,000

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