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Question: During 2016, Blue Inc. had 500,000 shares of common stock and 50,000 shares of 6% cumulative preferred stock outstanding. Ther preferred stock has a par value of $100 per share. Blue's net income for the year ended December 31, 2016 was $2,500,000. The income tax rate is 40%. Blue granted 200,000 stock options to its executives on January 1 of this year. Each option gives its holder the right to buy a share of common stock at an exercise price of $20. The options vest after two years. The market price of the common stock averaged $25 per share during 2016, and the price on 12/31/2016 was $32.

Required: Calculate the necessary EPS figures for Blue for the year 2016.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92715037

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