Answer:
A. $1.70
Explanation:
Available Information:
Actual average number of shares outstanding = 15,000 shares
Total common shares issued on conversion = 2,900 share
First Calculate Weighted average number of shares outstanding using following formula:
Weighted average number of shares outstanding = Actual average number of shares outstanding + Total common shares issued on conversion
Weighted average number of shares outstanding = 15,000 + 2,900
Weighted average number of shares outstanding = 17,900 shares
Now Put all the value in the following formula of Diluted EPS:
Diluted EPS = Net Income - Preferred dividend / Weighted average number of shares outstanding
Diluted EPS = ( $30,000 - $4,500 ) / 15000 shares
Diluted EPS = $25,500 / 15000 shares
Diluted EPS = $1.70 / Share
