Gamma pic had an issued share capital at I April 20X0 of: 200,000 made up of
Question:
Gamma pic had an issued share capital at I April 20X0 of:
• £200,000 made up of 20p shares; and
• 50,000 £ I convertible preference shares classified as equity receiving a dividend of £2.50 per share. These shares were convertible in 20X6 on the basis of one ordinary share for one preference share.
There was also loan capital of:
• £250,000 10% convertible loans. The loan was convertible in 20X9 on the basis of 500 shares for each £ 1,000 of loan, and the tax rate was 40%.
Earnings for the year ended 3 I March 20X1 were £5,000,000 aftertax.
Required:
(a) Calculate the diluted EPS for 20X1.
(b) Calculate the diluted EPS assuming that the convertible preference shares were receiving a dividend of £6 per share instead of £2.50.
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