Calculate the Incremental EPS for the Following Instrument A)075
B)0

question 86

Multiple Choice

Calculate the incremental EPS for the following instrument: $\begin{array}{|l|r|}\hline\begin{array}{l}\text { Convertible bonds outstanding, effective yield } \\\text { of } 7 \% \text { and coupon rate of } 6 \%\end{array} & \$ 2,000,000 \\\hline \text { Issue date } & \text { January 1, 2019 } \\\hline \text { Maturity date } & \text { December 31, 2018 } \\\hline \text { Conversion rate for each } \$ 1,000 \text { bond } & \text { 20 ordinary share } \\\hline \text { Income tax rate } & 25 \%\\\hline\end{array}$

• A)0.75
• B)0.88
• C)2.25
• D)2.63

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Definitions:

Opportunity Cost

The cost of missing out on the next best alternative when making a decision.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Network Design

The planning and optimization of a network's physical, financial, and operational capacities to achieve desired objectives.

Marginal Benefit

The additional satisfaction or utility a consumer receives from consuming one more unit of a good or service.