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Question 4.17: A Diluted EPS Calculation Using the If-Converted Method for ...

A Diluted EPS Calculation Using the If-Converted Method for Convertible Debt

Oppnox Company reported net income of $750,000 for the year ended 31 December 2005. The company had an average of 690,000 shares of common stock outstanding. In addition, the company has only one potentially dilutive security: $50,000 of 6 percent convertible bonds, convertible into a total of 10,000 shares. Assuming a tax rate of 30 percent, calculate Oppnox’s basic and diluted EPS.

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