Compute diluted earnings per share

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Question - Online Network Inc. has a net income of $640,000 in the current fiscal year. There are 100,000 shares of common stock outstanding, along with convertible bonds, which have a total face value of $1.2 million. The $1.2 million is represented by 1,200 different $1,000 bonds. Each $1,000 bond pays 8 percent interest. The conversion ratio is 20. The firm is in a 30 percent tax bracket.

Required -

a. Compute basic earnings per share.

b. Compute diluted earnings per share.

Reference no: EM132935968

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