Firm That Earned $20,000 (After Tax)had the Following Securities Outstanding

question 1

Multiple Choice

Firm that earned $20,000 (after tax) had the following securities outstanding all year during which the tax rate was 40%: 20,000 common shares
1,000,6%,$100 par cumulative nonconvertible preferred shares
2,000,4%,$50 par cumulative preferred shares,each share convertible into 5 common shares
100,8%,$1,000 convertible bonds,each convertible into 10 common shares (bonds were issued at face)
What is basic EPS? (Rounded to the nearest cent)

• A) $0.50
• B) $0.70
• C) $1.00
• D) $0.75

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Definitions:

Binomial Experiment

A statistical experiment that has exactly two mutually exclusive outcomes, often labeled as success and failure.

Possible Outcomes

Refers to all the potential results that may occur from a specific action or random experiment.

Probability

The likelihood or chance that a particular event will occur, often expressed as a number between 0 and 1.

Probability of Success

The likelihood of achieving a favorable outcome in a given trial or experiment.