Incentive stock options to purchase 40 million shares of common stock after July
ID: 2467217 • Letter: I
Question
Incentive stock options to purchase 40 million shares of common stock after July 1, 2015, at $14 per share were outstanding at the beginning and end of 2016. The average market price of Canaday’s common stock was $20 per share during 2016.
Canaday's net income for the year ended December 31, 2016, was $1,512 million. The effective income tax rate was 40%.
Calculate basic and diluted earnings per common share for the year ended December 31, 2016. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
At January 1, 2016, Canaday Corporation had outstanding the following securities:Explanation / Answer
Basic EPS
Denominator (Weighted average no of shares outstanding)
Diluted EPS
Stock Options
Convertible Bonds
Numerator (Basic EPS) Net Income 1512 Less: Preferred dividends 30*50*5% -75 Numerator (Basic EPS) 1437