Could you help solve this problem? Not sure what I\'m doing wrong. Stevens Corpo

Question

Could you help solve this problem? Not sure what I'm doing wrong.

Stevens Corporation had 38,065 shares of common stock outstanding during the current calendar year. On July 1, Stevens issued 2,025 convertible bonds . Each bond had a $1,000 face value. Each bond is convertible into 50 shares of common stock. The bonds were issued at face amount and pay stated rate of 7% interest annually for 10 years. Stevens had a net income of $271,984. Stevens’ tax rate was 30%.

Stevens’ Diluted EPS is ______________ (Round your answer to 2 decimal places)

2.66

3.63 ± 0.02

Explanation / Answer

Adjusted net inocme = 271984+(2025*1000*7%*6/12*70%) = 321596.50

Adjusted diluted shares = 38065+(2025*50*6/12) = 88690

Diluted earning per share = 321596.50/88690 = 3.63

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