Question
In order to calculate EPS for the current year, Ajax Corporation has collected the following information about its common stock: Outstanding shares - beginning of
In order to calculate EPS for the current year, Ajax Corporation has collected the following information about its common stock:
Outstanding shares - beginning of the year (January 1) | 1,000,000 |
Additional shares issued on April 1 | 200,000 |
15% stock dividend declared and distributed on July 1 |
|
Shares reacquired on October 1 | 100,000 |
Net income for the year | $3,000,000 |
Dividends declared and paid for noncumulative, nonconvertible preferred stock | $200,000 |
Calculate Ajaxs basic EPS.
Ajaxs capital structure includes convertible bonds with a face value of $4,000,000 (issued at par) that pay 5% annual interest. These bonds are convertible into 500,000 common shares. Ajaxs effective tax rate is 20%. Ajax has determined that the convertible bonds are dilutive. Calculate Ajaxs diluted EPS.
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