Test your understanding 5 A company had 8.28 million shares in issue at the start of the year and made no new issue of shares during the year ended 31 December 20X4, but on that date it had in issue $2,300,000 convertible loan stock 20X6- 20X9. The loan stock carries an effective rate of 10%. Assume an income tax rate of 30%. The earnings for the year were $2,208,000. This loan stock will be convertible into ordinary $1 shares as follows. 20X6 90 $1 shares for $100 nominal value loan stock 20X7 85 $1 shares for $100 nominal value loan stock 20X8 80 $1 shares for $100 nominal value loan stock 20X9 75 $1 shares for $100 nominal value loan stock Calculate the diluted earnings per share for the year ended 24 D comber 20X4.