Reference no: EM132681665
Question - JSP Corporation reported basic eps of $3.00 and diluted eps of for 2016. The company's eps calculations are shown next: [JSP has a tax rate of 25%]
Numerator ($) Denominator
NI $3,500,000
Div on 10% Preferred Stock 500,000
Weighted-average C/S outstanding 1,000,000
Basic eps = $3.00
Stock option dilution 10,000
Convertible debt dilution 240,000 240,000
Required -
a. What is the interest rate and C/S conversion rate for the $4 million par of the convertible debt? A certificate of debt has a face value of $1,000.
b. There were 50,000 shares under stock option during the year, and the average exercise price was $20 per share. What was the average market price of the company's C/S during 2016?
c. Compute the diluted eps.
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