Calculate the share effect on the incremental EPS for the following instrument: $\begin{array}{|l|r|}
\hline\text { Face value of } 10,000 \text { preferred shares with } & \
\text { dividend rate of } 5 \% & \$ 5,000,000 \
\hline \text { Conversion rate for each preferred share } & 5 \text { ordinary shares } \
\hline \text { Income tax rate } & 30 \%\\hline
\end{array}$
A)5
B)25,000
C)50,000
D)250,000

Question

Quizplus · Accepted Answer

The share effect is calculated by multiplying the number of preferred shares (10,000) by the conversion rate (5 ordinary shares per preferred share), resulting in 50,000 additional ordinary shares.

Calculate the Share Effect on the Incremental EPS for the Following