Calculate the Income Effect on the Incremental EPS for the Following

question 38

Multiple Choice

Calculate the income effect on the incremental EPS for the following instrument: Convertible bonds outstanding, yield of 6% and coupon rate of 6%
$2,000,000
Issue date
January 1, 2021
Maturity date
December 31, 2028
Conversion rate for each $1,000 bond
20 ordinary shares
Income tax rate
25%

• A)0.75
• B)2.25
• C)40,000
• D)90,000