Compute the diluted earnings per share for 2018. Harvey Inc. has 3,000,000 shares of $1 par...
Compute the diluted earnings per share for 2018.
- Harvey Inc. has 3,000,000 shares of $1 par value common stock outstanding at January 1. On July 1, Harvey repurchased 300,000 shares at a cost of $21 per share. In addition, at December 31, 2018, 250,000 shares were issuable upon exercise of executive stock options which an exercise price of $20 per share. The average market price of the company’s stock was $25 per share.
Harvey Inc. also has two convertible securities.
- Convertible bonds, $4,000,000 face value, 5% interest, convertible into 100,000 shares of common stock.
- 40,000 shares of $100 par value convertible preferred stock with a dividend rate of 4%. Each $100 par value share is convertible into 8 shares each.
During 2018, Harvey’s net income was $7,200,000 and all preferred stock dividends were declared and paid. The company’s tax rate is 20%
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Compute the diluted earnings per share for 2018.
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2.) Compute basic earnings per share. Round to two decimal
places.
3.) Compute the foregone interest expense AFTER TAX on the
convertible bonds.
4.) Compute the per share effect of the convertible bonds. Round to
two decimal places.
5.) Compute the foregone dividends on the convertible preferred
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Clearly label the basic and diluted numerator / denominator =
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2.) Compute basic earnings per share. Round to two decimal
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3.) Compute the foregone interest expense AFTER TAX on the
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7.) Compute the incremental increase in the number of shares
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Clearly label the basic and diluted numerator / denominator =
earnings per share similarly to the format as the chart below.
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preferred stock issued and outstanding. On March 1, 2018, Berclair
purchased 24 million shares of its common stock as treasury stock.
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million treasury shares were sold on October 1. Net income for the
year ended December 31, 2018, was $110 million. The income tax rate...
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