Question
Throughout 2015, Smith had 200,000 shares of common stock outstanding. Smith's net income for the year ended December 31, 2015 was $800,000. Smith's income tax
Throughout 2015, Smith had 200,000 shares of common stock outstanding. Smith's net income for the year ended December 31, 2015 was $800,000. Smith's income tax rate is 20%. During 2015, Smith declared and paid dividends on its 10,000 shares of 6% convertible preferred $100 par value stock. Each share of the convertible preferred stock can be converted, at the discretion of the stockholder, into 3 shares of Smith's common stock.
During the entire year ending 12-31-15, Smith had 15,000 outstanding employee stock options. Each option had an exercise price of $30 per share of Smith common stock. During the year ended 12-31-15, the average market price of Smith's common stock was $50 per share.
What will Smith report as its diluted earnings per share for the year ended 12-31-15?
Answer options:
A. $3.88
B. $3.70
C. $3.14
D. $3.59
E. $3.39
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