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    Ramirez Corporation has 500,000 shares of common stock outstanding throughout 2004. In addition, the corporation has 5,000, 20-year, 7% bonds issued at par in 2002. Each $1,000 bond is convertible into 25 shares of common stock after 9/23/05. During the year 2004, the corporation earned $600,000 after deducting all expenses. The taxrate was 30%.

    Compute the proper earnings per share for 2004.

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    Solution Preview

    First, we need to compute the net income as follows: -
    600,000x(1 - tax rate)
    600,000x(1 - 0.30) = 420,000

    Basic earnings ...

    Solution Summary

    This solution is comprised of a detailed explanation to compute the proper earnings per share for Ramierz Corp. in 2004.