1. A firm has Net Income of $800,000. They have 200,000 shares of stock which received a $2 dividend and a price of $30 per share. They also have 20,000 shares of preferred stock with a $6 annual dividend and a price of $90 per share. They have also issued 50,000 warrants that allow holders to buy stock for $25 per share. The tax rate is 25%. What is their primary EPS? (You have to calculate both and use the Treasury stock method where proceeds from warrants are used to buy back stock.)

a) $3.26 b) $3.40 c) $3.61 d) $4.17

2. Which is statement is correct?

Under financial leases, the lessor usually pays for maintenance.

Under operating leases, the lessee expects to keep the asset after the lease ends

Financial leases are generally long term and cover most of the economic life of the asset

All of the above are correct