Executrain Has 50,000,7%,bonds Outstanding for the Second Half of the Year.Each

question 55

Multiple Choice

Executrain has 50,000,7%,bonds outstanding for the second half of the year.Each $1,000 bond,sold July 1 at par,is convertible into 20 shares of common stock.The corporate tax rate is 40%.What is the incremental income per common share?

• A)$0.70
• B)$1.05
• C)$1.50
• D)$2.10

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Definitions:

Inventory

The total amount of goods and materials held by a business for the purpose of sale or production.

Credit Policy

A credit policy is a set of guidelines that a company follows to determine credit terms and conditions for its customers.

Agency Problem

A conflict of interest inherent in any relationship where one party is expected to act in another's best interest, such as between shareholders and company executives.