Question

Basic Facts Net Income: $450,000 100,000 shares of $5 par, common shares outstanding all year 20,000...

Basic Facts

Net Income: $450,000

100,000 shares of $5 par, common shares outstanding all year

20,000 non-convertible, $50 par, 8% cumulative preferred shares outstanding all year

Tax rate: 30%

Example 1 – Additional Facts – Scenario #3

On January 1, the company granted 5,000 stock options to their select managers. The options had an exercise price of $24. The average market price of the company’s stock during the year was $30 per share. The options were the only dilutive securities in the capital structure.

Calculate Diluted EPS

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