Required information

Skip to question

$[$The following information applies to the questions displayed below.$]$

To incorporate convertible securities into the calculation of diluted EPS, the conversion is assumed to have occurred at the beginning of the period $($or at the time the convertible security is issued, if later$).$ The denominator of the EPS fraction is adjusted for the additional common shares assumed, and the numerator is increased by the interest $($after$-$tax$)$ on bonds or other debt or the preferred dividends that would have been avoided in the event of conversion.

Knowledge Check $01$

Lakeview Corporation had $100,000$ shares of common stock outstanding and $200,000$ shares of $10\%$ preferred stock that are convertible into $150,000$ common shares. Net income for the current year was $$500,000$ with a $25\%$ tax rate. What is the amount of the diluted EPS for the current year?

Note: Round your answer to $2$ decimal places.