Calculate the Income Effect on the Incremental EPS for the Following

question 37

Multiple Choice

Calculate the income effect on 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)30,000
• B)35,000
• C)90,000
• D)105,000

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Definitions:

Conventional Viewpoint

A perspective or opinion that is widely accepted or regarded as standard, traditional, or typical within a given society or community.

Overwhelming

A feeling or situation so intense that it's hard to manage or endure.

Persistent and Unswerving Action

Continuous and unwavering effort towards achieving a specific goal, without being diverted by challenges or setbacks.

Consistent Behavioural Style

A pattern of behavior or actions that are uniform and predictable over time in similar situations.