Earnings for a Firm for the Current Year Are $20,000

Earnings for a firm for the current year are $20,000 and the weighted average number of common shares before considering potentially dilutive securities is 18,000.The firm has no preferred shares but has 100, 8%, $1,000 convertible bonds which were issued at face value many years ago.Each bond is convertible into 50 common shares.The tax rate is 40%.Compute EPS to be reported for this firm.(Rounded to the nearest cent)

A) Basic EPS $1.11; diluted EPS $1.08.
B) Basic EPS $1.14; diluted EPS $1.11.
C) Basic EPS $1.11; diluted EPS $1.11.
D) Basic EPS $1.08; diluted EPS $1.08.

Correct Answer:

Verified

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