Calculate the Incremental EPS for the Following Instrument: Convertible Bonds

question 51

Multiple Choice

Calculate the incremental EPS for the following instrument: Convertible bonds outstanding, effective yield of 7% and coupon rate of 7%
$2,000,000
Issue date
January 1, 2021
Maturity date
December 31, 2024
Conversion rate for each $1,000 bond
20 ordinary shares
Income tax rate
25%

• A)$0.75
• B)$0.88
• C)$2.25
• D)$2.63

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Definitions:

Endorphins

Neurochemicals produced within the body that act as natural painkillers and mood elevators, often credited with producing feelings of pleasure and euphoria.

Neurotransmitters

Substances that carry signals from one neuron to another across a synapse in the nervous system.

Opiate Drugs

A category of drugs derived from opium plants, often used for pain relief but associated with high addiction potential.

Receptor Sites

Specific regions on the surface of a cell or within a cell where messenger molecules, such as hormones or neurotransmitters, bind to initiate a cellular response.