Question
5. Heights Co. has asked you to consult on the effects of the following on the EPS calculation. a. Heights issued 15,000 stock options
5. Heights Co. has asked you to consult on the effects of the following on the EPS calculation. a. Heights issued 15,000 stock options exchangeable into common shares on a one for one basis. The exercise price of the option is $ 10. and the average market price is $ 20 for the year. Calculate the number of shares to account for the stock options. b. Heights has $ 1,500,000 of convertible bonds outstanding. They pay interest of $ 38,000 and upon conversion would add 45,000 shares to the weighted average shares outstanding. Assume that net income is $ 230,000,weighted average shares outstanding was 100,000 and preferred dividends are $ 25,000, what would be the reported diluted earnings per share? C. Lowes, a subsidiary of Heights, has cumulative convertible preferred shares that pay a dividend of $ 12,000 and convert into 15,000 common shares. Assume net income of $ 125,000, common shares outstanding of 60,000 what is the diluted earnings per share?
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