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At the Beginning of the Year, a Firm Issued (1)$100,000

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At the beginning of the year, a firm issued (1)$100,000 of 5% bonds (at face value)convertible into a total of 2,000 of the firm's common shares, and (2)$1,000, $9 cumulative preferred shares convertible into a total of 1,000 of the firm's common shares.The tax rate is 40%.There were no conversions during the year; the firm earned $100,000, and had 20,000 common shares outstanding the entire year.Compute basic EPS and diluted EPS. At the beginning of the year, a firm issued (1)$100,000 of 5% bonds (at face value)convertible into a total of 2,000 of the firm's common shares, and (2)$1,000, $9 cumulative preferred shares convertible into a total of 1,000 of the firm's common shares.The tax rate is 40%.There were no conversions during the year; the firm earned $100,000, and had 20,000 common shares outstanding the entire year.Compute basic EPS and diluted EPS.

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Definitions:

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