(solution) The following data relate to Nevada Ltd. for the calendar year

(solution) The following data relate to Nevada Ltd. for the calendar year

The following data relate to Nevada Ltd. for the calendar year 2014:

Net income (30% tax rate) …………………………….. $3,500,000

Average number of common shares

outstanding during 2014 …………………………… 1,000,000 shares

10%, cumulative convertible preferred shares:

convertible into 80,000 common shares …………. $1,600,000

8% convertible bonds; convertible into 75,000

common shares ………………………………………. $2,500,000

Stock options, exercisable at $25 per share ………… 90,000 shares

All the convertible securities and stock options were outstanding all year.

The average market price of the common shares in 2014 was $30.

Instructions

Calculate:

a. basic earnings per share

b. diluted earnings per share.

This Problem is the same just plug and play the numbers and you will get it. And
at the same time learn to solve it for the exam
Solution – Question 6
PART A
(a)
Total
Current year's dividend ($.80…