During 2016, Penny Co

question 14

Multiple Choice

During 2016, Penny Co. had net income of $200,000 including after-tax interest expense of $30,000 on convertible bonds. The $300,000 face value of convertible bonds can be converted into common stock at the rate of 300 shares per $1,000 bond. Prior to the conversion, there were 400,000 shares of common stock outstanding. What is the amount of fully diluted earnings per share?

• A) $0.500
• B) $0.469
• C) $0.408
• D) not determinable because the bonds are not dilutive

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