22. The Maritime Engineering Corp sold 1,500 convertible bonds two years ago at their $1,000 par value. The 20-year bonds carried a coupon rate of 8% and were convertible into stock at $20 per share. At the time, the firms stock was selling for $15, and similar bonds without a conversion feature were yielding 10%. Maritimes stock is now selling for $25. The firm does not pay dividends.

a. Calculate the return on investment from buying the bond when it was issued, exercising the conversion today, and immediately selling the stock received.

b. What would the return on an investment in Maritimes stock have been?

c. What was the conversion premium of the bond at the time it was issued?

d. Last year Maritime had Net Income of $4.5 million and 3 million shares outstanding. The companys marginal tax rate was 34%. Compute Maritimes basic and diluted EPS.