# Problem 19-18 (Static) EPS; Stock Options; Nonconvertible Preferred; Convertible Bonds; Shares Sold**[Learning Objectives: LO19-4, 19-5, 19-6, 19-7, 19-8, 19-9]**At January 1, 2021, Canaday Corporation had outstanding the following securities:- 600 million common shares- 20 million 6% cumulative preferred shares, $50 par- 6.4% convertible bonds, $2,000 million face amount, convertible into 80 million common shares### Additional Information:- On September 1, 2021, Canaday sold 72 million additional shares of common stock.- Incentive stock options to purchase 60 million shares of common stock after July 1, 2020, at $12 per share, were outstanding at the beginning and end of 2021. The average market price of Canaday’s common stock was $18 per share during 2021.- Canaday’s net income for the year ended December 31, 2021, was $1,476 million. The effective income tax rate was 25%.### Required:1. **Calculate the basic and the diluted earnings per common share for the year ended December 31, 2021.** - Round "Earnings per share" answers to 2 decimal places. - Enter your answers in millions (e.g., 10,000,000 should be entered as 10).### Earnings Per Share Calculation Table:| | Numerator | Denominator | Earnings per Share ||--------|-----------|-------------|--------------------|| Basic | | | || Diluted| | | |

Basic EPS= Net income available to common stock holders/ Weighted average number of common stock Net income available to Common stock holders= Net income- Preference Share dividend Preference share dividend= Par value* Dividend % = 20*50*6% = $ 60 Mn Net income available to Common stock holders = $1476- $ 60= $ 1416 Mn Calculation of weighted number of shares Particulars Amount opening 600 Mn Issue in Sep (72*4/12) 24 Mn Total weighted number of shares 624 MnCalculation of Basic EPS Basic EPS= $ 1416 Mn/ 624 Mn = $ 2.27 Calculation of Diluted EPS Particulars Amount ($ in Mn) Net income to common stock holders 1416 Bond Interest after tax (2000*6.4%*75%) 96 Net income 1512Calculation of weighted number of shares Particulars Amount Common stock 624 Add: Convertible bond 80 Add: Dilutive options 60-(60*12/18) 20 Total 724Calculation of DPS= $ 1512 Mn/724 Mn= $ 2.09