ABC Corporation has 500,000 common shares and 50,000 6% cumulative preferred shares outstanding. Preferred shares have an even value of $ 100 per share. ABC did not pay dividends in 2020. It reported a net income of $ 2.5 million. On January 1, ABC granted its executives 10,000 stock options. Each option grants its holder the right to purchase 20 common shares at an exercise price of $ 29 per share. Options require a one year service period. The average market value of the shares was $ 30 per share during 2020. Determine the basic earnings per share a. $4.90 b. $4.34 c. $5.00 d. $4.40
ABC Corporation has 500,000 common shares and 50,000 6% cumulative preferred shares outstanding. Preferred shares have an even value of $ 100 per share. ABC did not pay dividends in 2020. It reported a net income of $ 2.5 million. On January 1, ABC granted its executives 10,000 stock options. Each option grants its holder the right to purchase 20 common shares at an exercise price of $ 29 per share. Options require a one year service period. The average market value of the shares was $ 30 per share during 2020. Determine the basic earnings per share a. $4.90 b. $4.34 c. $5.00 d. $4.40
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ABC Corporation has 500,000 common shares and 50,000 6% cumulative preferred shares outstanding. Preferred shares have an even value of $ 100 per share. ABC did not pay dividends in 2020. It reported a net income of $ 2.5 million. On January 1, ABC granted its executives 10,000 stock options. Each option grants its holder the right to purchase 20 common shares at an exercise price of $ 29 per share. Options require a one year service period. The average market value of the shares was $ 30 per share during 2020.
Determine the basic earnings per share
a. $4.90
b. $4.34
c. $5.00
d. $4.40
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