Answer:
Basic EPS = $1.34 million
Diluted EPS = $1.23 million
Explanation:
As per the data given in the question,
Share on Jan-1 = 400 million
On Sep 1 Treasury shares = 12 million (36 million × 4 months ÷ 12 months )
No. of shares = 400 - 12 = 388 million
Basic EPS = Net income ÷ number of outstanding shares
= $520 million ÷ 388 million
= $1.34 million
Diluted EPS :
Net income = $520 million
After tax interest saving = $8 (20 million - (40% × 20 million ))
The 20 million is come from
= $520 million ×8%
= 20 million
Adjusted net income = $520 + $8 = $528 million
No. of shares as computed above = 388 million
Bond conversion shares = 40 million
Total share outstanding = 388 + 40 = 428 million
Diluted EPS = $528 million ÷ 428 million
= $1.23
