0 Problem #1 (20 minutes; 25 points) Use the information below to answer the following questions related to Earnings per Share. Show your work to enable me to provide you with partial credit, and clearly label your answer. Greene Athletic Company had net income of $250,000. They began the year with 20,000 common shares issued and outstanding. On April 1, they issued a 2 for 1 stock split and on July 1, they issued 5,000 additional shares. There were no other transactions affecting common stock during the year. The average market price of the common stock during the year was $30/share. The market price of the common stock at the end of the year was $34/share. The company's marginal tax rate is 25%. The following information pertains to securities issued by the company. Each security was outstanding during the entire year. 1. Share options to purchase 6,000 shares of common stock at an exercise price of $22/share. In addition, unrecognized compensation cost related to the share options is $4 per share. 2. 3,200 shares of 8%, $100 par, cumulative, non-convertible preferred stock with an average market price of $107 and an ending market price of $102/share. 3. 500 $1,000 bonds with a stated interest rate of 10%, convertible into 15 shares of common stock, issued at par. 4. 700 $1,000 bonds with a stated interest rate of 8%, issued at 104. The premium is being amortized at the rate of $2,000/year, and these bonds are convertible into 20 shares of common stock.

Given the information that you have about the 8% bonds, are they potentially dilutive? Why or why not? Rank each poteotialfy difutive securify, beginning with the most dautive. Given the information that you have about the options, are they potentially dilutive? Why or why not? Given the information you have about the shares of the 8%,$100 par preferred stock, are they potentially diturive? Why or why not? Cormpute Greene's Basic Eamings per Share. Given the information you have about the 10% bonds, are they potentially dilutive? Winy or why not? Compute Greene's Diluted Earniogs per Shace. Problem $1 (20 minutes; 25 points) Use the information below to answer the following questions related to Earnirvas per shure. Shom vour wronk to enable ine to provide you with partial credit, and clearly label your answer. Greene Athletic Compary had net income of $250,000. They began the vear with 20,000 common shares bued ard outstanding. On April 1, they issued a 2 for 1 stocksplit and on July 1, they issued 5.900 addational thates. There were no outher transactions affecting common stock during the year. The average market price of the conimon stock durins the veat was 530/ share. The market price of the common stock at the end of the year was $34/ share. The comparv/s mairyinat tax rate is 2596 : The following information pertains to securities issued by the company. Each security was outstanding during the entire veat. 1. Share options to purchase 6,000 shares of common stock at an exercise price of $22/ share. in addition, unrecognized compensation cost related to the share options is $4 per share. 2. 3,200 shares of 8%,$100 par, cumulative, non-convertible preferred stock with an average market price of $107 and an ending market price of $102/ share. 3. 500$1,000 bonds with a stated interest rate of 10%, convertible into 15 shares of common stock, issued at par. 4. 700$1,000 bonds with a stated interest rate of 8%, issued at 104 . The premium is being amortized at the rate of $2,000/ year, and these bonds are convertible into 20 shares of common stock