EPS+EXAMPLE+2+SOLUTION+Case+2

EPS+EXAMPLE+2+SOLUTION+Case+2 - EPS EXAMPLE 2 SOLUT ION...

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Unformatted text preview: EPS EXAMPLE 2 SOLUT ION Case 2 Assumption (a) using 8% Weighted Average Number of Common Shares: Date Share Changes Shares Outstanding 1/1 Beginning Balance 100,000 6/30 Stock Split 200,000 Kiesos Method Dates O/S Shares O/S Restatement F raction Of Year Weighted Shares 1/1-6/30 100,000 2 6/12 100,000 6/30-12/31 200,000 1 6/12 100,000 Total 200,000 F reemanMethod Date Shares Activity Restatement F raction Of Year Weighted Shares 1/1 100,000 2 12/12 200,000 Total 200,000 Basic Earnings per Share Adjustme nt Adjuste d EPS Operating Income 278,00 278,000 1.39 Loss from Discontinued Oper. 40,000 40,000 .20 Net Income 318,00 318,000 1.59 (1) EPS EXAMPLE 2 SOLUT ION Incremental EPS Present Value @ 8% $120,000 x 3.99271 = $479,125 $1,200,000 x .68058 = 816,696 $1,295,821 Interest net of taxes: $1,295,821 x .08 x.6 = $62,200 Incremental EPS: 8% Conv. Bonds: Income Adj. - $62,199 = $62,199 = $1.30 /sh Share Adj. - 20shs./b x 2 x 1,200b = 48,000shs....
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EPS+EXAMPLE+2+SOLUTION+Case+2 - EPS EXAMPLE 2 SOLUT ION...

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