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:

Direction of Rotation

The direction in which a mechanical or electrical device rotates, which can be clockwise or counterclockwise.

Leads

Conductors or wires that provide electrical connections between the components of an electrical circuit.

Squirrel-Cage Motor

A type of induction motor characterized by a rotor designed as a series of short-circuited rings connected by bars, resembling a squirrel cage.

Current Draw

The amount of electrical current pulled from a source by a load or device in operation, often measured in amperes.