KNOCKOUT BOARD HW PROBLEM

NET INC$=50,000$; COMM STK$=1,000$ SHARES

PREF STK$=1,000$ SHARES, $$6,$ CUMULATIVE

THE PREF STK IS CONVERTIBLE ITO $3$ SH COMM FOR EACH SH PREFERRRED

B$/$P$=,8,000$ PAR, $10\%.$ ISSUED OCT $1$ST

CONVERTIBLE INTO $700$ SH COMM

TAX RATE$=\mathrm{.}40$

WE MUST ISSUE $2,000$ NEW SHARES IF IN $2030$ WE EARN $45,000$ NET INCOME.

FIND BASIC AND DILUTED EPS