4. (Weighted-Average Number of Shares Outstanding) On January 1, 2009, Davis Inc reports 400,000 shares outstanding. On March 1, the company re-purchases 100,000 shares at $22 per share. On July 1, the company issues 200,000 new shares. On October 1, the company declares a 50% stock dividend. On November 1, 2009, holders of convertible noncumulative preferred stock redeemed their preferred shares for 100,000 common shares. Preferred dividends of $200,000 had been declared and paid in fiscal 2009 prior to the conversion. Net income for fiscal year 2009 was $2,000,000. Calculate the weighted average shares outstanding for the fiscal year 2009 basic earnings per share calculation. a. (A) Shares Outstanding Change in Shares Outstanding Date (B) Fraction of Year Outstanding (C) Stock Dividend or Stock Split Adjustment Factor Weighted Shares (AXBXC) Weighted average number of shares outstanding b. Calculate basic earnings per share for fiscal year 2009. c. Now assume that the company had outstanding at the beginning of the year two potentially- dilutive securities: (1) a $500,000 of 9% convertible bonds issued at par with a conversion factor of 20:1 and stock options underlying 30,000 shares with a strike price of $14 (the average price during the year was $20). The marginal tax rate is 40%. What is diluted EPS for fiscal year 2009? Convertible Bond: Num: Denom: EPS Effect: Stock Options: Test: Denom: Rank 1 Calculation: Rank 2 Calculation: Dilutive EPS = Basic EPS