Online Network Inc. has a net income of $700,000 in the current fiscal year. There are 100,000 shares of common stock outstanding, along with convertible bonds, which have a total face value of $1.5 million. The $1.5 million is represented by 1,500 different $1,000 bonds. Each $1,000 bond pays 6 percent interest. The conversion ratio is 10. The firm is in a 20 percent tax bracket. a. Compute basic earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) Basic earnings per share b. Compute diluted earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) Diluted earnings per share

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Online Network Inc. has a net income of $700,000 in the current fiscal year. There are 100,000 shares of common stock outstanding,
along with convertible bonds, which have a total face value of $1.5 million. The $1.5 million is represented by 1,500 different $1,000
bonds. Each $1,000 bond pays 6 percent interest. The conversion ratio is 10. The firm is in a 20 percent tax bracket.
a. Compute basic earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.)
Basic earnings per share
C
b. Compute diluted earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.)
200
Diluted earnings per share
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Transcribed Image Text:Online Network Inc. has a net income of $700,000 in the current fiscal year. There are 100,000 shares of common stock outstanding, along with convertible bonds, which have a total face value of $1.5 million. The $1.5 million is represented by 1,500 different $1,000 bonds. Each $1,000 bond pays 6 percent interest. The conversion ratio is 10. The firm is in a 20 percent tax bracket. a. Compute basic earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) Basic earnings per share C b. Compute diluted earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) 200 Diluted earnings per share < Prev 8 of 10 MacBook Air Next >
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