Calculate the Income Effect on the Incremental EPS for the Following

question 19

Multiple Choice

Calculate the income 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)$1.00
• B)$75,000
• C)$175,000
• D)$250,000

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Definitions:

Sinkhole

A depression or hole in the ground caused by the collapse of a surface layer, often due to the dissolution of underlying limestone, volcanic activity, or water withdrawal from wells.

Stalactite

A type of speleothem that hangs from the ceiling of limestone caves, formed by the deposition of minerals from dripping water.

Limestone Caves

Natural cavities formed within limestone rock due to the dissolution of carbonate minerals by water, known for their unique formations and speleothems.

Quartz Crystals

Hard, crystalline minerals made of silica (SiO2), used in various applications due to their piezoelectric properties.