Lindstrom Corp. reported earnings after tax (EAT) of $2,160,000 last year along with basic EPS of $3.

Question:

Lindstrom Corp. reported earnings after tax (EAT) of $2,160,000 last year along with basic EPS of $3. All of Lindstrom’s bonds are convertible and, if converted, would increase the number of shares of the firm’s stock outstanding by 15%. Lindstrom is subject to a total effective tax rate of 40% and has a TIE of 10. Compute Lindstrom’s diluted earnings per share.