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Suppose you run a very successful animation company that operates publicly on Toronto Stock Exchange. During COVID your business has risen due to lockdowns. Now it is year end for the 2021 calendar year and you want to calculate your EPS. Being a public firm, your company offers has convertible debt for shareholders. Currently, the value of convertible debt (bonds) is $10,000,000 which is also the par value. The par value of each bond is $1,000 and each bond can be converted into 92 shares. The bonds pay interest at an annual rate of 7% semi-annually on October 31st and April 30. The convertible debt was issued in a prior year. However, in 2021 on May 1s, all of the convertible debt was converted into common shares. The firm also has warrants. The firm has 500,000 warrants outstanding that can be converted for 1 warrant per common share at a set price of $60 per share. The warrants were issued in a prior year. However, in 2021 on September 1", all the warrants were converted into common shares. However, it is important to note that the average share price of the common shares from January 1, 2021, to September 1st, 2021, was $72.841. Your company has 175,000 ordinary shares outstanding. The shares were issued on February 28th, 2020. The firm also has convertible preferred shares for its shareholders, these shares pay a dividend of $0.07 per share per quarter. The total number of convertible shares is 550,000. The 550,000 convertible preferred shares were issued in a prior year. However, in 2021 on June 30th, 500,000 of the convertible preferred shares were converted into common shares at a rate of 1 for 1. The firm also issues options, in 2021 the firm issued options on March 1", all options can used to obtain 1,000,000 common shares at $99 per share. The options expire 23 years from their date of issuance. The value of all common shares outstanding at the beginning of the year is $3,648,818. The tax rate is 40%, the pre-tax rate of return is 18% and the average price of the shares for the entire year is $62. Net income for the year is $6,282,492. Assume IFRS. Clearly identify each part of the question and show all your work. 3. Solve the following: a. What is the numerator? (3 marks) b. What is the denominator? (5 marks) c. What is basic EPS? (2 marks) d. What is Diluted EPS? Rank your options, show all your work in a clear manner (10 marks)

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