Excercise 16-25 - (b) Shares outstanding.

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EXERCISE 16-25 (10–15 minutes) (a) Net income. ................................................................................. $240,000 Add: Interest savings (net of tax) [$180,000 X (1 – .40)]. ....................................................... 108,000 Adjusted net income. ................................................................. $348,000 $3,000,000 ÷ $1,000 = 3,000 bonds X 15 45,000 shares Diluted EPS: $348,000 ÷ (100,000 + 45,000) = $2.40
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Unformatted text preview: (b) Shares outstanding. ................................................................... 100,000 Add: Shares assumed to be issued (10,000* X 5). ................. 50,000 Shares outstanding adjusted for dilutive securities. ............. 150,000 *$1,000,000 $100 Diluted EPS: ($240,000 $0) 150,000 = $1.60 Note : Preferred dividends are not deducted since preferred stock was assumed converted into common stock....
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This note was uploaded on 04/22/2010 for the course ACCT ACC552 taught by Professor Hint during the Spring '09 term at Keller Graduate School of Management.

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Excercise 16-25 - (b) Shares outstanding.

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