Issuance 2 Convertible Bond Issue Issue $28 million in convertible bonds with a stated rate of 2.5% and conversion price of $200. Interest is paid semi-annually, the issue price is expected to be $30,345,000 million, and the underwriter will charge $345,000 to take the issue to market. The journal entry at issuance would be:

Cash		30,000,000
Unamortized BIC		345,000
	Premium on B/P		2,345,000
	Bonds Payable		28,000,000

Additional Info:

The company is a non-dividend company (neither common nor preferred stockholders are paid a dividend).

2 million shares of common stock outstanding.

Earning before interest, issue expenses, and taxes is $12 million (expected increase of 5% year over year).

Stock price is $11 per share (expected increase of 4% year over year).

Tax rate for all years is 21%.

Questions:

1. Calculate the basic EPS

2. Calculate the diluted EPS

3. Calculate Price to Earnings Ratio