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Solve_ch16 - 39,000.00 Basic EPS = NI/WA = 1000,000/39000 =...

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Name: __________________________ Problem chapter 16 1. Basic and diluted EPS. The following information was taken from the books and records of Sean, Inc.: Net Income \$1000,000 Capital Structure: Convertible bonds 10% \$20,000 worth. Each \$500 bond can be converted into 50 shares of common stock. The common stock \$5 par started the year with 10,000 shares outstanding (issued 8 years ago). On April 1 there was a repurchase of 2,000 shares. On October 1 there was a sale of 5,000 shares to be placed in treasury. On November there was a 4-for-1 split. At the end of the year there were stock warrants outstanding (for the whole year) to purchase 15,000 shares of stock for \$40 per share. The average market price for the stock is \$80. The corporate income tax rate averages 35% Instructions Compute basic and diluted earnings per share. Change in shares shares outstanding transaction of year split WA 1-Jan 10,000 3/12 4 10,000.00 1-Apr -2000 8,000 6/12 4 16,000.00 1-Oct 5000 13,000 1/12 4 4,333.33 1-Nov 52,000 2/12 8,666.67

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Unformatted text preview: 39,000.00 Basic EPS = NI/WA = 1000,000/39000 = 25.64 Warrants 15,000*40/80 = 7500 15000-7500=7500 Diluted EPS 1000000 +20000*0.10*(1-0.35) =20.65 39000+7500 +20000*50/500 21.51 > 0.65 1. Basic and diluted EPS. The following information was taken from the books and records of Teller, Inc.: Net Income \$800,000 Capital Structure: Convertible bonds 6% \$45,000 worth. Each \$500 bond can be converted into 25 shares of common stock. The common stock \$10 par started the year with 65,000 shares outstanding (issued 5 years ago). On April 1 there was a repurchase of 4,000 shares. On September 1, reissued 6,000 shares of treasury stock. On November there was a 3 for 1 split. At the end of the year there were stock warrants outstanding (for the whole year) to purchase 30,000 shares of stock for \$35 per share. The average market price for the stock is \$55. The corporate income tax rate averages 40%. Instructions: Compute basic and diluted earnings per share....
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Solve_ch16 - 39,000.00 Basic EPS = NI/WA = 1000,000/39000 =...

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