Bacardi Inc. had 500,000 shares of common stock and 50,000 shares of 6% cumulative preferred stockoutstanding for the entire year. The non-convertible preferred stock has a par value of $100 per share. Bacardi did not declare or pay any dividends during the year. Bacardi's net income for the year was $2.5million and the income tax rate is 40%. Bacardi granted 10,000 stock options to its executives onJanuary 1 of this year. Each option gives its holder the right to buy 20 shares of common stock at anexercise price of $29 per share. The market price of the common stock averaged $30 per share duringthe year and the stock price at the end of the year was $32 per share. Question 1 Basic earnings per share reported by Bacardi Inc. for the year is closest to: $5.00 $4.40 $4.34 $4.24 Diluted earnings per share reported by Bacardi Inc. for the year is closest to: $5.00 $4.40 $4.34 $4.24
Bacardi Inc. had 500,000 shares of common stock and 50,000 shares of 6% cumulative
outstanding for the entire year. The non-convertible preferred stock has a par value of $100 per share.
Bacardi did not declare or pay any dividends during the year. Bacardi's net income for the year was $2.5
million and the income tax rate is 40%. Bacardi granted 10,000 stock options to its executives on
January 1 of this year. Each option gives its holder the right to buy 20 shares of common stock at an
exercise price of $29 per share. The market price of the common stock averaged $30 per share during
the year and the stock price at the end of the year was $32 per share.
Question 1
Basic earnings per share reported by Bacardi Inc. for the year is closest to:
$5.00
$4.40
$4.34
$4.24
Diluted earnings per share reported by Bacardi Inc. for the year is closest to:
$5.00
$4.40
$4.34
$4.24
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