Question 3 As at 30 June 20x2 Wrights Ltd. has 5,000,000 ordinary shares outstanding and profit for the period attributable to ordinary shareholders is MU5,895,000. As at the reporting date, Wrights Ltd. has 250,000 convertible bonds (face value of each bond is MU1) in issue, which may be converted into ordinary shares on the basis of one share for every two bonds. The interest coupon on the bond is 5%, and the tax rate in force is 30%. What is diluted earnings per share for 30 June 20x2? Diluted earnings per share for 30 June 20x2 is MU1.13 calculated as follows {[MU5,895,000 + MU12,500] [5,000,000 + 250,000]} Diluted earnings per share for 30 June 20x2 is MU1.15 {[MU5,895,000 + MU12,500 - (MU12,500 x 0.30)] [5,000,000 + (250,000 2)]} Diluted earnings per share for 30 June 20x2 is MU1.12 {[MU5,895,000 + MU12,500 - (MU12,500 x 0.30)] [5,000,000 + 250,000]} Diluted earnings per share for 30 June 20x2 is MU1.15, which is calculated as {[MU5,895,000 + MU12,500] = [5,000,000 + (250,000 2)]}