Collins Corp.'s capital structure was as follows:
December 31________
Year 4 Year 5
Outstanding shares of stock:
Common 100,000 100,000
Convertible preferred 10,000 10,000
Convertible bonds $1,000,000 $1,000,000
During Year 5, Collins paid dividends of $3.00 per share on its preferred stock. The preferred shares are convertible into 20,000 shares of common stock. The interest rate of convertible bonds is 9%. For each $1,000 unit convertible bond, it is convertible into 30 shares of common stock.
Assume that the income tax rate is 30%.
1. If net income for Year 5 is $300,000, Collins should report BEPS and DEPS as
2. If net income for Year 5 is $250,000, Collins should report BEPS and DEPS as
3. If net income for Year 5 is $160,000, Collins should report BEPS and DEPS as
If net income for Year 5 is $250,000, Collins should report BEPS and DEPS as