Question
Water Co. had net income for 2015 of $500,000. For the period the average number of common shares outstanding was 200,000 shares. There are 12,000
Water Co. had net income for 2015 of $500,000. For the period the average number of common shares outstanding was 200,000 shares. There are 12,000 options outstanding during the entire year. Each option has the right to buy one share of stock at $40 per share. The average market price of the common stock during the year was $42. Also, 1,000 shares of 10%, $10 par, cumulative preferred shares were outstanding during 2015. The preferred shares are convertible into 500 common shares. The shares were not converted during 2015 and no preferred dividends were paid.
What should Water Co. report for diluted earnings per share for the year ended 2015?
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