Reference no: EM133030505

Question - The following data are presented by Company B for the 2020 year:

1. 10%, cumulative preferred shares, convertible into 120,000 common shares total face of $1,600,000.

2. 8% convertible bonds; convertible into 105,000 common shares with a total face value of $7,500,000.

3. The preferred shares and the convertible bonds were outstanding from the beginning of the year.

4. Net income for the years was $ 3,500,000.

5. There are 360,000 options outstanding allowing holders to buy 360,000 shares of Company B for $25.

6. On January 1, 2020 there were 1,000,000 common shares outstanding.

7. On March 1, 2020 300,000 common shares were issued.

8. On August 1, 2020 a 30% stock dividend was declared and issued for the common shares outstanding.

9. On December 1, 2020 100,000 common shares were repurchased by the Company.

10. In 2020, a $320,000 dividend was declared and distributed on the preferred shares, however, no dividends were declared in 2019.

11. The average market price of the common shares in 2020 was $30. The stock price was $27 on January 1, 2020, and $35 on December 31, 2020.

12. The convertible bonds were originally sold at par.

13.The income tax rate for 2020 is 20%.

Required - Calculate basic and diluted EPS. Show all calculations and note any assumptions made.