Exercise 16-24
The Indigo Corporation issued 10-year, $4,890,000 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 14:1, and in 2 years it will increase to 16:1. At the date of
issue, the bonds were sold at 96. Bond discount is amortized on a straight-line basis. Indigo’s effective tax was 35%. Net income in 2017 was
$8,550,000, and the company had 1,980,000 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