Answer:
B) Option b
Explanation:
basic EPS = (net income - preferred dividends) / weighted average common stocks = [$20,000,000 - (100,000 x $100 x 6% x 6/12)] / 7,000,000 = ($20,000,000 - $300,000) / 7,000,000 = $2.81
diluted EPS = [$20,000,000 - (100,000 x $100 x 6% x 6/12) + (10,000 x $1,000 x 10% x 60%)] / [7,000,000 + (10,000 x 50)] = $20,300,000 / 7,500,000 = $2.71