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1. The following applies to the Dunbar Corp for 20...

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1. The following applies to the Dunbar Corp for 2010: Shares Transactions in Common Shares Change Outstanding 1/1/10, Beginning Shares Outstanding 1,000,000 3/1/10, Purchase of Treasury Shares (60,000) 940,000 6/1/10, Stock Split 2-for-1 940,000 1,880,000 11/1/10, Issuance of Additional Shares 120,000 2,000,000 Outstanding Stock Options (Granted in 2008) Of the 70,000 outstanding options granted in 2008, 60,000 shares are exercisable at the option price of $25 per share and 10,000 shares are exercisable at the option price of $35 per share. Average 2010 market price was $30 per share. (Market price and option price already adjusted for stock split). Convertible Bonds (Issued December 1, 2010) $5 million of 4% bonds convertible to 400,000 shares of common stock. Net income in 2010 was $3,200,000. Dunbar?s tax rate is 35% A) Compute the basic earnings per share for 2010. B) Compute the diluted earnings per share for 2010. C) Let?s assume Dunbar Corp made a net loss of $3.2 million in 2010 instead of a net income, compute the basic and diluted earnings per share.

 

Paper#5960 | Written in 18-Jul-2015

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