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Calculate the fully diluted earnings per share

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Question - The following data relate to Wizards Ltd. for the calendar year 2019:

Net income $3,500,000

Average number of common shares outstanding during 2019 1,000,000 shares

10%, cumulative convertible preferred shares: convertible into 80,000 common shares $1,600,000

8% convertible bonds; convertible into 75,000 common shares $2,500,000

Stock call options, exercisable at $25 per share 90,000 shares

All the convertible securities and stock options were outstanding all year. The average market price of the common shares in 2019 was $30. Marginal income tax for 2019 was 30%.

Required -

a) Calculate the basic earnings per share

b) Calculate the fully diluted earnings per share. Present you answers in a layering format, and round all your EPS figures to two decimal points.

Reference no: EM132882416

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