1. The Cool Co. provides stock options as part of the compensation for its top managers. For the fiscal year ending 12/31/2018, managers held 12,000,000 vested options (1 option can be exchanged for 1 share of common stock) with a strike price of $15/share. The Cool Co. uses the Treasury Stock Method if accounting for stock options in diluted earnings per share. None of the options were exercised during the year. As The Cool Co. prepares its financial statements, the net income available to common shareholders is $265,000,000 and the weighted average of common shares outstanding is 125,000,000. Basic EPS is $2.12/share. The average market price of The Cool Co. shares was $24/share during the year. What is their diluted earnings per share, if it needs to be calculated.

A $ 2.05

B $ 1.93

C $ 2.35

D $ 2.26

E No need to report diluted earnings per share

2. AAM has a complex capital structure. Net income available to common shareholders this year is $1,378,500 and, for basic EPS, the weighted average common shares outstanding is 234,000. AAM also has preferred shareholders that who able to convert their preferred shares to 48,000 common shares (but have not done so). They preferred shareholders have claim to a $20,000 declared cash dividend. AAM has an outstanding bond, Bond A, that was sold at face value of $250,000 with an 8% annual coupon rate. Those bonds are convertible to 24,000 shares of common stock (but were not converted). Finally, AAA also has Bond B, sold at face value of $1,000,000 with a 10% coupon rate. Those bonds are convertible to 25,000 shares of common stock (but were not converted). AAMs statutory tax rate is 30%. What is AAMs diluted earnings per share?

A $ 5.89

B $ 5.34

C $ 4.12

D $ 4.48

E $ 4.94

3. AAM has a complex capital structure. Net income available to common shareholders this year is $1,378,500 and, for basic EPS, the weighted average common shares outstanding is 234,000. AAM also has preferred shareholders that who able to convert their preferred shares to 48,000 common shares (but have not done so). They preferred shareholders have claim to a $20,000 declared cash dividend. AAM has an outstanding bond, Bond A, that was sold at face value of $250,000 with an 8% annual coupon rate. Those bonds are convertible to 24,000 shares of common stock (but were not converted). Finally, AAA also has Bond B, sold at face value of $1,000,000 with a 10% coupon rate. Those bonds are convertible to 25,000 shares of common stock (but were not converted). AAMs statutory tax rate is 30%. What is AAMs basic earnings per share?

A $ 5.89

B $ 5.40

C $ 4.12

D $ 4.16

E $ 4.96

4. Big Box Inc. reported a net operating loss of ($ 150) for the year ended 12/31/2018. Their business had a bit of a turnaround in 2019 and they had a profitable year. As the accountants worked through year-end, they calculated Big Box had taxable income of $100. They companys corporate tax rate is 30%. How many more years can Big Box carry forward this net operating loss after 2019?

A 19

B 2

C indefinitely

D 49

E 99

5. Big Box Inc. reported a net operating loss of ($ 150) for the year ended 12/31/2018. Their business had a bit of a turnaround in 2019 and they had a profitable year. As the accountants worked through year-end, they calculated Big Box had taxable income of $100. They companys corporate tax rate is 30%. Based on this information, what is Big Boxs taxes payable for 2019?

A $ 0

B $ 30

C $ 15

D $ 6

E $ 20