PART TWO-OBJECTIVE QUESTIONS (42 POINTS) All answers related to PART TWO must be filled on the cover page schedules. A) Dilutive Securities (17 points) Paltel Group has the following earnings and securities: Net income Weighted average Common shares outstanding $1,400,000 200,000 1. 8% cumulative, convertible preferred stock, par value $100; 200,000 shares authorized, 50,000 shares issued and outstanding. Each share of preferred stock is convertible into 5 shares of common stock. Preferred dividends were not declared in 2017. 2. Series (A) 12% five-year convertible bonds were issued on January 1, 2016 with a face value of $500,000 @ 104 %. The bonds are issued to yield 10%. Each bond is convertible into 10 shares of common stock. 3. Series (B) 10% five-year convertible bonds were issued on July 1, 2017 with a face value of $200,000 @ 100%. Each bond is convertible into 8 shares of common stock. 4. Options were granted on January 1, 2017 to purchase 15,000 shares, exercise price $22. 5. Warrants were granted on September 30, 2017 to purchase 17,000 shares, exercise price $18. The average market price of Paltel's common stock during 2017 was $30 per share. All options and warrants were still outstanding at the end of 2017, and no bonds or preferred stocks were converted during 2017. The tax rate is 40%. 1. Calculate the basic earnings per share amount EPS. For each of the above listed securities: 2. Calculate the incremental per share effect amount. 3. Indicate whether each security is dilutive (D) or anti-dilutive (A). 4. Indicate the method applied (If Converted Method (C) or Treasury Stock Method (T). 5. Calculate the dilutive earnings per share amount DEPS. EPS = Net Income Prother dividland 5 SO WAGSO = 1 you, 000