During 2009, Falwell Inc. had 500,000 shares of common stock and 50,000 shares of 6% cumulative preferred stock outstanding. The preferred stock has a par value of $100 per share. Falwell did not declare or pay any dividends during 2009.
Falwell's net income for the year ended December 31, 2009, was $2.5 million. The income tax rate is 40%. Falwell granted 10,000 stock options to its executives on January 1 of this year. Each option gives its holder the right to buy 20 shares of common stock at an exercise price of $29 per share. The options vest after one year. The market price of the common stock averaged $30 per share during 2009, and the price on 12/31/09 was $33.
44. (1) What is Falwell's diluted earnings per share for 2009, rounded to the nearest cent?
D. Cannot determine from the given information.
For diluted EPS we need the diluted shares
The common shares are 500,000
The dividend on preferred stock is 50,000X6=300,000. Since the preferred stock is ...
The solution explains how to calculate diluted earnings per share.