Question Four (10%) Arnold-SA Co earned a net income of $400,000 in 2019 and had 100,000 ordinary shares outstanding throughout the year. Outstanding all year was $800,000 of 10% bonds, which are convertible into 25,000 ordinary shares. The interest expense on the liability component of the convertible bonds was $50,000. 100,000, 5% cumulative preferences shares (par of $10) were purchased on January 1st 2019, preference shares are convertible into 30,000 ordinary share. Arnold-SA Co tax rate is 40%. Compute Arnold-SA's 2019 Basic and diluted earnings per share (round to 2 decimals) Formulas: Basic EPS = (Net Income - Preference Dividend)/ Outstanding Ordinary shares Diluted EPS = Basic EPS + Convertibles = (Net Income - Preference Dividend)/ Outstanding Ordinary shares + (Interest expense* (1- tax rate)/shares converted + (Preference Dividend/ shares converted) 7