52. Assume U.S. GAAP (generally accepted accounting principles) applies unless
otherwise noted.
An analyst gathers the following information about a company:
Shares of common stock outstanding 1,000,000
Net income for the year $1,500,000
Par value of convertible bonds with a 4 percent coupon rate $10,000,000
Par value of cumulative preferred stock with a 7 percent dividend rate $2,000,000
Tax rate 30%
The bonds were issued at par and can be converted into 300,000 common shares.
All securities were outstanding for the entire year. Diluted earnings per share is
closest to:
A. $1.05.
B. $1.26.
C. $1.36.
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