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Ivanhoe Corporation had net income of $53,700 for the year ended December 31, 2020, and a weighted average number of common shares outstanding of 10,300. The following information is provided regarding the capital structure:

1. 8% convertible debt, 260 bonds each convertible into 46 common shares. The bonds were outstanding for the entire year. The income tax rate is 45%. The bonds were issued at par ($1,000 per bond). No bonds were converted during the year. 2. 3% convertible, cumulative $100 preferred shares, 1,000 shares issued and outstanding. Each preferred share is convertible into 2 common shares. The preferred shares were issued at par and were outstanding the entire year. No shares were converted during the year.

Calculate the income effect of the dividends on preferred shares.

Dividends on preferred share

Calculate the basic earnings per share for 2020. (Round answer to 2 decimal places, e.g. 15.25.)

Basic earnings per share

Calculate the after-tax interest paid on the 8% bonds.

After-tax interest on bonds converted

Determine an incremental per share effect for 8% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.)

Potentially dilutive security		Incremental Numerator Effect		Incremental Denominator Effect		EPS
8% Bonds		$enter a dollar amount		enter a dollar amount		$enter a dollar amount rounded to 2 decimal places

Determine an incremental per share effect for 3% preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.)

Potentially dilutive security		Incremental Numerator Effect		Incremental Denominator Effect		EPS
3% Preferred shares		$enter a dollar amount		enter a dollar amount		$enter a dollar amount rounded to 2 decimal places

Rank the potentially dilutive securities from most dilutive to least dilutive.

8% Bonds		select an option Rank 1Rank 2Anti-dilutive
3% Preferred shares		select an option

Calculate the diluted earnings per share for 2020, using the if-converted method. For simplicity, ignore the requirement to record the debt and equity components of the bonds separately. (Round earnings per share to 2 decimal places, e.g. 15.25.)

		Numerator		Denominator		EPS
Basic		$enter a dollar amount		enter a dollar amount		$enter a dollar amount rounded to 2 decimal places
select an item BondsPreferred shares		enter a dollar amount		enter a dollar amount
Sub Total		enter a dollar amount		enter a dollar amount		enter a dollar amount rounded to 2 decimal places
select an item BondsPreferred shares		enter a dollar amount		enter a dollar amount
		$enter a total amount		enter a total amount		$enter a dollar amount rounded to 2 decimal places

Diluted EPS

enter the diluted earnings per share in dollars

When Ivanhoe Corporation issued the 8% convertible debt, would the companys interest rate on straight debt have been higher or lower than 8%?

When Ivanhoe Corporation issued the 8% convertible debt, the companys interest rate on straight debt have been select an option

higher or lower

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