A ration has 100,000 shares of common stock outstanding and 20,000 shares of nonconvertible preferred stock.

A

ration has 100,000 shares of common stock outstanding and 20,000 shares of nonconvertible preferred stock. A dividend of $1 per share is distributed on the common stock and one of $2 per share is distributed on the preferred stock. Net income is $400,000 and the tax rate is 20 percent. The corporation also has 10,000 bonds with a face value of $100 and an interest rate of 4 percent. Each bond is convertible into two shares of common stock although none have yet been converted. The bonds were issued several years ago at face value. What is reported as diluted earnings per share (rounded)?

a) 2.80 $

b) 3.27 $

c) 3.33 $

d) 3.60 $