The Dunlop Corporation reported basic EPS of $3.50 for the year ended December 31,2014;the denominator used in the basic EPS calculation was 360,000 shares.Dunlop's marginal income tax rate is 40%.Dunlap had the following convertible securities outstanding during the entire year:
• 8% convertible preferred stock with a total par value of $1,000,000;the preferred stock is convertible into 22,000 shares of common stock.
• 10% convertible bonds with a total par value of $6,000,000;the convertible bonds are convertible into 120,000 shares of common stock.
What is the diluted EPS? (Hint: First test each security separately for dilution.)

Question

Quizplus · Accepted Answer

The Answer of The Dunlop Corporation reported basic EPS of $3.50 for the year ended December 31,2014;the denominator used in the basic EPS calculation was 360,000 shares.Dunlop's marginal income tax rate is 40%.Dunlap had the following convertible securities outstanding during the entire year:
• 8% convertible preferred stock with a total par value of $1,000,000;the preferred stock is convertible into 22,000 shares of common stock.
• 10% convertible bonds with a total par value of $6,000,000;the convertible bonds are convertible into 120,000 shares of common stock.
What is the diluted EPS? (Hint: First test each security separately for dilution.)

The Dunlop Corporation Reported Basic EPS of $3