Cabaret Co. has issued stock options (warrants) to its employees, some of which will come to maturity this year. At fiscal year end the firm expects the options to be exercised on 48,750 shares at the price of $25.50 per share. Currently, the firm has 1,280,400 shares outstanding, will earn $2,800,000 in net income, and has a market share price of $32.00. After the stock options are exercised, what will the be the effect of Earnings Per Share (EPS)?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Cabaret Co. has issued stock options (warrants) to its employees,
some of which will come to maturity this year. At fiscal year end
the firm expects the options to be exercised on 48,750 shares at the
price of $25.50 per share. Currently, the firm has 1,280,400 shares
outstanding, will earn $2,800,000 in net income, and has a market
share price of $32.00. After the stock options are exercised, what
will the be the effect of Earnings Per Share (EPS)?
Transcribed Image Text:Cabaret Co. has issued stock options (warrants) to its employees, some of which will come to maturity this year. At fiscal year end the firm expects the options to be exercised on 48,750 shares at the price of $25.50 per share. Currently, the firm has 1,280,400 shares outstanding, will earn $2,800,000 in net income, and has a market share price of $32.00. After the stock options are exercised, what will the be the effect of Earnings Per Share (EPS)?
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