Bravo (Parent) Echo (Subsidiary)

Bravo Inc Net Income $ 480,000 Net Income $ 290,000

CS Outstanding 80,000 CS Outstanding 80,000
PS Outstanding 5,000
PS Dividend $ 15,000

Amount of Bonds 10,000 Amount of Bonds 10,000

* Interest Per Bond $ 8 * Shares Per Bond 2
= Total Interest $ 80,000 = Convertible $ 20,000
* One Less Tax Rate 79% 1-21% + Bonds Outstanding $ 80,000
= Interest Saved $ 63,200 = Total $ 100,000
+ Sub NI $ 290,000
= Earnings for DEPS $ 353,200 Shares from Parent 80,000
/ Total Share Amount $ 100,000
= Total % 80%
 Echo Bonds Convertible
Amount 10,000
Price Per Bond $ 100
Tax Rate 21%
Interest Per Bond $ 8
Shares Per One Bond Convert 2

Earnings for DEPS $ 353,200

*% 80%
= Income for Parent DEPS $ 282,560
+ Parent NI $ 480,000
- Parent Div $ (15,000)
= $ 747,560
/ Parent Shares Outstanding 80,000
= Parent DEPS $ 9.34