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# Exercise 16-24 The Sage Corporation issued 10-year, \$4,390,000 par, 7% callable convertible subordinated debentures on January 2, 2017.

Exercise 16-24

The Sage Corporation issued 10-year, \$4,390,000 par, 7% callable convertible subordinated debentures on January 2, 2017. The bonds have a par value of \$1,000, with interest payable annually. The current conversion ratio is 13:1, and in 2 years it will increase to 19:1. At the date of issue, the bonds were sold at 96. Bond discount is amortized on a straight-line basis. Sage's effective tax was 35%. Net income in 2017 was \$7,950,000, and the company had 2,185,000 shares outstanding during the entire year.

(a) Compute both basic and diluted earnings per share. (Round answers to 2 decimal places, e.g. \$2.55.)

Basic earnings per share\$

Diluted earnings per share\$

Basic EPS = (7,950,000 - 0) / 2,185,000 = 3.64... View the full answer

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