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Sources of Capital: Owner's equity; EPS

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During its fiscal year, Morey Corporation had outstanding 600,000 shares of $6.50 preferred stock and 2,000,000 shares of uncommon stock. Morey's net income for the year was $19,550,000. The company also had granted stock options to employees for 200,000 shares of common stock at $10 per share. The average price of the company's common stock during the fiscal year was @20 per share.

1. Calculate the company's basic earnings per share
2. Calculate the company's diluted earnings per share.

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Basic EPS = Net Income / Shares Outstanding = 19,550,000 / 2,000,000 = 9.775

For diluted EPS, the impact of each potentially dilutive security ...

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