1. Boom Inc. granted its chief executive officer 60 stock options to acquire Boom Inc.s common stock. Each stock option permits the CEO to purchase one share at an exercise price of $30 per share on or up to 10 years from the grant date. The stock options contract requires the CEO to pay the exercise price in cash to receive one share per option exercised. The options vest in 5 years. The fair value of each option on the grant date was $7.50 and Boom Inc. believes that there is a 100% probability that the CEO will remain with Boom Inc. through the vesting period.The CEO remains with Boom Inc. through the vesting period (that is, years 1 through 5). The average stock price in year 6 is $45 per share. By how many incremental shares do the stock options increase diluted shares outstanding, as compared to weighted average shares outstanding? Use the treasury stock method.

3. At the beginning of year 7, Boom Inc. had 2000 shares of common stock outstanding. On July 1 of year 7, Boom Inc. repurchased 80 shares for $60 per share. Boom Inc.s fiscal year end is December 31.

Date	Item	Debit	Credit
Year 7	Treasury stock	480
	Cash		480

4. Calculate the weighted-average shares outstanding for year 7, taking into consideration the share repurchases from part 3