Petty Co. owned 100% of the common stock of Sunlight Co. In 2020, Petty reported net income of $580,000 (exclusive of any investment income) with 120,000 common shares outstanding. Petty also pay an annual preferred dividend of $20,000 In 2020, Sunlight reported net income of $400,000 with 90,000 shares of common stock outstanding. Sunlight had 6,000 of $100 convertible bonds outstanding that pay annual interest of $8 per bond. Each of these bonds is convertible into four shares of common stock. Assume a tax rate of 30%. In order to determine the consolidated EPS, we need to know the parent's share in the subsidiary's diluted earnings. Calculate the parent's share in the subsidiary's diluted earnings by answering the following two questions, 1. What is Petty's ownership interest in Sunlight (in percentage) after considering the effects of the convertible bonds? Round your answer to four decimal places (e.g. 0.23456-0.2346 or 23.46%) (2.5 points) Answer: 2. What is Sunlight's diluted earnings after considering the effects of the convertible bonds? (2.5 points) Answer: Page 18 of 22 Previous Page Next Page