Answer :
Answer:
The answer is "$84,000 in the numerator and 60,000 in the denominator".
Explanation:
If securities are transformed into stocks. So, the common stack holder should be have a larger net revenue, calculation of net revenue
[tex]= \$ 2,000,000 \times 7 \% \times (1 - 0.40) \\\\= \$ 2,000,000 \times \frac{7}{100} \times 0.6\\\\= \$ 20,000 \times 7 \times \frac{6}{10}\\\\= \$ 2,000\times 7\times 6\\\\= \$ 2,000 \times 42\\\\= \$ 84,000\\[/tex]
In addition, the loads will also raise the total amount of shares which is calculated as follows:
[tex]= \frac{\$ 2,000,000}{ \$ 1,000 \times 30}\\\\= \$ 60,000 \ stocks[/tex]
Formula:
[tex]\ EPS =\frac{\ net \ income}{ \ average \ number \ of \ stocks}[/tex]
That's why in this question numerator is = $ 84, 000 and denominator = $ 60,000