Calculate the Share Effect on the Incremental EPS for the Following

question 59

Multiple Choice

Calculate the share effect on the incremental EPS for the following instrument: $$\begin{array}{l}\begin{array} {| l | r |} \hline\text { Convertible bonds outstanding, yield of } 5 \% \text { and }\\ \text { coupon rate of } 6 \% & \$ 2,000,000 \\\hline \text { Issue date } & \text { January } 1,2013 \\\hline \text { Maturity date } & \text { December } 31,2020 \\\hline \text { Conversion rate for each } \$ 1,000 \text { bond } & 40 \text { ordinary shares } \\\hline \text { Income tax rate } & 25 \% \\\hline\end{array}\end{array}$$

• A)0.63
• B)1.88
• C)75,000
• D)80,000

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Definitions:

Industry Versus Inferiority

A stage in Erik Erikson's theory of psychosocial development where children, typically between ages 6 and 11, develop a sense of competence or inferiority based on their abilities to master skills and tasks.

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A theory proposed by Erik Erikson that describes how individuals evolve through and navigate various social and emotional stages throughout their lives.

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A stage in psychological development where an individual develops a sense of competence and achievement, usually occurring during childhood.

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