What is the answer to this question: Question 4. 4. (TCO A) Wonderful Inc. issue

Question

What is the answer to this question:

Question 4. 4. (TCO A) Wonderful Inc. issued to its existing common stockholders 2000 warrants. Each warrant entitles the stockholder to purchase 3 shares of common stock at a price of $4 each. The common stock of the company is selling in the stock exchange at $6 each. If Wonderful has 20,000 shares of common stock outstanding throughout the year and its Net Income is $8,000 after paying the preferred dividends, what will be the dilutive EPS of Wonderful incorporation under treasury stock method? Round your answer to two decimal points. (Points : 5)

       $4
       $0.40

       $0.30

       $0.36

Question 4. 4. (TCO A) Wonderful Inc. issued to its existing common stockholders 2000 warrants. Each warrant entitles the stockholder to purchase 3 shares of common stock at a price of $4 each. The common stock of the company is selling in the stock exchange at $6 each. If Wonderful has 20,000 shares of common stock outstanding throughout the year and its Net Income is $8,000 after paying the preferred dividends, what will be the dilutive EPS of Wonderful incorporation under treasury stock method? Round your answer to two decimal points. (Points : 5)

Explanation / Answer

Number of potential equity shares outstanding = 2000 * 3 = 6000 shares

Dilutive PES = (Net income after preferred dividend) /Total equity shares

                     = 8000 / (20000+ 6000)

                   = 8000 / 26000

                     = $ .30

correct option is "C" -$.30 per share

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.