Question#01:

a) Convertible bonds are issued in combination of bond benefits. Do you agree? Explain.

b) On January 1, 2017, Mirpur Corp. had 400,000 shares of common stock outstanding. During 2017, it had the following transactions that affected the common stock account.

February 1	Issued 100,000 shares
April 1	Issued a 2-for-1 stock split
May 1	Acquired 100,000 shares of treasury stock
June 1	Issued 50,000 shares for land purchase
July 1	Reissued 60,000 shared of treasury stock
October 1	Issued a 10% stock dividend

Mirpur Corp. earned net income of Tk. 5,456,000 during 2017. In addition, it had 100,000 shares of 9% Tk.100 par nonconvertible, noncumulative preferred stock outstanding for the entire year. The company declared and paid a preferred dividend in 2017.

Required:

Compute the basic earnings per share for 2017.

1. Mirpur Corp. has net income of Tk. 210,000 during 2017 and weighted average number of shares outstanding during the period of 100,000. The company has two convertible bond issues. One is a 10 years, 6% issue sold at 103 (total Tk. 1.000.000) in last year which is convertible into 20,000 shares. The other is a 10% issue sold at 100 (total Tk. 1,000,000) on March 31 of this current year and convertible into 30,000 shares. The tax rate is 35%. Company follows straight line basis for amortization.

Required:

1. Compute the basic EPS for 2017.
2. Compute the diluted EPS for 2017.