FRGearing

i) interest on preference shares = 10% * $5m = $0.5m
profit 1m - interest 0.5m = $0.5 m for equity shareholders.
Earnings per share
preference shares - 0.5/5 = $0.10 = 10c
equity shares - 0.5/5 = 10c

ii) interest on pref. shares = 10% * $5m = 0.5m
profit 1.3m - interest 0.5m = 0.8m for equity shareholders.
EPS
preference shares - 0.5/5 = $0.10 = 10c
equity shares - 0.8/5 = 16c

iii) interest on pref. shares = 10% * $5m = 0.5m = $500,000
profit $700,000 - interest $500,000 = $200,000 for equity shareholders
EPS
preference shares -$500,000/ $5,000,000 = 10c
equity shares - $200,000 / $5,000,000 = 4c

I got the same answer.

Perfect. :)