During the Current Year, East Corporation Had 2 Million Shares

question 116

Multiple Choice

During the current year, East Corporation had 2 million shares of common stock outstanding. Two thousand $1,000, 8% convertible bonds were issued at face amount at the beginning of the year. East reported income before tax of $3 million and net income of $1.8 million for the year. Each bond is convertible into 10 shares of common stock. What is diluted EPS (rounded) ?

• A)$.90.
• B)$.95.
• C)$.89.
• D)$.94.

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Definitions:

Driving Torque

The force that causes rotation in a mechanical system, typically generated by an engine or motor.

Operating Quadrants

The four potential modes of operation for a drive or motor, determined by the direction of torque and rotation or direction of current and voltage.

Torque

A measure of the force that can cause an object to rotate about an axis. It is a major consideration in machine design and operation.

Rotation

The act or process of moving or turning around a central axis or point.