Net income of $1,500,000, tax retention rate of 60%. 1,000,000 shares of common are outstanding at the beginning of the year. 10,000, 6% convertible bonds with each bond convertible into 20 shares of common stock were issued at par ($100) on June 30 of this year. The firm has 100,000 warrants outstanding all year with an exercise price of $25 per share. The average stock price for the period is $20, and the ending stock price is $30. Based on the following data, how many shares of common stock should be used to calculate diluted earnings per share? A) 1,200,000 B) 1,050,000 C) 1,100,000 D) 1,000,000
Net income of $1,500,000, tax retention rate of 60%. 1,000,000 shares of common are outstanding at the beginning of the year. 10,000, 6% convertible bonds with each bond convertible into 20 shares of common stock were issued at par ($100) on June 30 of this year. The firm has 100,000 warrants outstanding all year with an exercise price of $25 per share. The average stock price for the period is $20, and the ending stock price is $30. Based on the following data, how many shares of common stock should be used to calculate diluted earnings per share? A) 1,200,000 B) 1,050,000 C) 1,100,000 D) 1,000,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Net income of $1,500,000, tax retention rate of 60%.
1,000,000 shares of common are outstanding at the beginning of the year.
10,000, 6% convertible bonds with each bond convertible into 20 shares of common stock were issued at par ($100) on June 30 of this year.
The firm has 100,000 warrants outstanding all year with an exercise
price of $25 per share.
The average stock price for the period is $20, and the ending stock price is $30.
Based on the following data, how many shares of common stock should be used to calculate diluted earnings per share?
A) 1,200,000
B) 1,050,000
C) 1,100,000
D) 1,000,000
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