Question

Mirrlees Corp. has 11,000,000 bonds convertible into 39 shares per $1,000 bond. Mirrlees has 570,000 outstanding shares. Mirrlees has a tax rate of 35%. The average Aa bond yield at the time of issue was 13%. Compute the "basic earnings per share" if after-tax earnings are $780,000. (Round your answer to 2 decimal places.) $1.01 $0.13 $0.91 $1.37

Answer 1

Answer: 1.37

Step-by-step explanation:

The basic earnings per share" if after-tax earnings are $780,000 would be calculated as the after tax earning divided by the outstanding shares. This will be:

= $780000 / $570000

= 1.3684211

= 1.37