During 2016, Penny Co. had net income of $200,000 including after-tax interest expense of $30,000 on convertible bonds. The $300,000 face value of convertible bonds can be converted into common stock at the rate of 300 shares per $1,000 bond. Prior to the conversion, there were 400,000 shares of common stock outstanding. What is the amount of fully diluted earnings per share?

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To calculate the fully diluted earnings per share (EPS), first, add back the after-tax interest expense to net income to find the adjusted net income, which is $200,000 + $30,000 = $230,000. Then, calculate the number of shares that the bonds can be converted into: 300 shares per $1,000 bond for a $300,000 face value equals 300 * 300 = 90,000 additional shares. Add these to the original 400,000 shares for a total of 490,000 shares. Finally, divide the adjusted net income by the total number of shares: $230,000 / 490,000 = $0.469 per share.