%3Ctable%20cellpadding%3D%220%22%20cellspacing%3D%220%22%20width%3D%22620%22%20c
ID: 2504277 • Letter: #
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/ Answer
1.
Basic earnings per share =
700 million + 75 million=775 million
Preferred dividend = 8% * 35million = $2,800,000
Net income - preferred dividend = $1,516,000,000 - 2,800,000 = $1,513,200,000
EPS = $1513200000/775 million = $1.95
2.
Common shares on Jan 1, 2013 = 700 million
Common shares on Sep 1, 2013 = 700 + 75 million = 775 million
Common shares from stock options:
50 million - (50 million * $10 / $20) = 25 million
Convertible bonds = 70 million
Total common shares = 775 + 25 + 70 million = 870 million
Adjusted net income = $1,516 million + (4% * 2,500 million * (1-40% tax) = 1,516 million + 60 million
= $1,576,000,000
Diluted earnings per share = $1,576 million / 870 million = $1.81
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