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Find what should tarheel report as diluted earning per share

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Reference no: EM133000061

Tarheel Corp.'s weighted-average number of common shares outstanding for 20X1 was 90,000 shares and its net income for 20X1 was $500,000. Tarheel had no preferred stock outstanding.

  • At the beginning of 20X1, Tarheel had outstanding 500, $1,000 face value convertible bonds. The bonds were issued at par and have a stated (face) interest rate of 4%.
  • Each convertible bond is convertible into 20 shares of common stock. None of the bonds were actually converted into stock during 20X1.
  • Tarheel has a tax rate of 20%.

Problem 1: What should Tarheel report as its diluted earnings per share for 20X1?

Select one:
a. $5.20
b. $5.56
c. $5.78
d. $5.00
e. $5.16
f. $5.04
g. $5.73

Reference no: EM133000061

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