"PMR, Inc. was incorporated in Delaware on January 1, 2015.

"

"PMR Inc. Corporate Stock

as of December 31, 2017"

Par value $5 per share

Authorized 1,000,000 Shares of Common Stock

Issued & outstanding 500,000 Shares of Common Stock

Two years later, the Board of Directors created a strategic plan for global expansion of its main product. On January 1, 2017, PMR issued 1,000 convertible bonds to begin implementing the plan. The corporation did quite well its first two years of operations. Hint: ignore income tax effects for this problem.

Assume:

Net Income $200,000

Bonds issued 2,100 convertible bonds

Bond term 5 years

Bond face value $1,000

Bond contract rate of Interest 5%

Convertible into 200 shares of common stock for each $1,000 bond

Required:

a) Calculate basic EPS in 2017.

b) Calculate diluted EPS in 2017.

c) In your own words, explain the difference between simple and diluted earnings per share.

d) In your own words, explain how investors use EPS and Diluted EPS to evaluate alternative investment opportunities.