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I am trying to calculate the diluted EPS for the following company but I'm having problems identifying how would these bonds below, affect the
I am trying to calculate the diluted EPS for the following company but I'm having problems identifying how would these bonds below, affect the calculation from te perspective of how much dilution would these bonds/warrants add. Can you please help? Question DetailsOn July 1, 2011, the company issued $170,000 of 12 year, 8% bonds with detachable warrants at 93.The bonds fair value without the warrants was $130,000. The warrants fair value in the marketwas $30,000 shortly after issuance. The warrants were issued at the rate of one warrant foreach $100 bond sold. Interest on the bonds is paid semi-annually each July 1 and December 31.No interest has been accrued at December 31, 2011 on the bonds since there will be none paid untilJanuary 1, 2012.Common stock warrants are exercisable at $1.25 per share and the average market price of common shares during 2011 was $2.50 per share.