Steven Limited's net income for the year ended December $31,2023$ was $$650,250$ and there were $92,000$ common shares outstanding during the entire year. Steven has the following two convertible securities outstanding:$10\%$ convertible bonds $($each $$1,000$ bond is convertible into $20$ common shares$)$$$200,0005\%$ convertible $$100$ par value cumulative preferred shares $($each share is convertible into two common shares$)$$$125,000$Both convertible securities were issued at face value in $2020.$ There were no conversions during $2023,$ and Steven's income tax rate is $25\%.($a$)$Your answer is correct.Calculate the income effect of the dividends on $5\%$ preferred shares.Income effect of the dividends$$6250$

Calculate basic earnings per share. $($For simplicity, ignore the requirement to record the debt and equity portions of the convertible bond separately$).($Round answer to $2$ decimal places, e$.$g$.15\mathrm{.}25.)$

Basic earnings per share $

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Solution

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$($c$)$

Calculate the after$-$tax interest paid on the $10\%$ bonds.

After$-$tax interest paid $