Witter House is a calendar-year firm with 450 million common shares outstanding throughout 2024 and 2025....

 

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Witter House is a calendar-year firm with 450 million common shares outstanding throughout 2024 and 2025. As part of its executive compensation plan, at January 1, 2023, the company had issued 35 million executive stock options permitting executives to buy 35 million shares of stock for $15 within the next eight years, but not prior to January 1, 2026. The fair value of the options was estimated on the grant date to be $3 per option. In 2024, Witter House began granting employees stock awards rather than stock options as part of its equity compensation plans and granted 20 million restricted common shares to senior executives at January 1, 2024. The shares vest three years later. The fair value of the stock was $16 per share on the grant date. The average price of the common shares was $16 and $25 during 2024 and 2025, respectively. The stock options qualify as an incentive plan. The restricted stock does not. The company's net income was $300 million and $310 million in 2024 and 2025, respectively. Required: 1. Compute basic and diluted earnings per share for Witter House in 2024. 2. Compute basic and diluted earnings per share for Witter House in 2025. Note: Do not round intermediate calculations. Except for per share amounts, enter your answers in millions (i.e., 10,000,000 should be entered as 10). Round "Earnings per share" answer to 2 decimal places. Round "Denominator" answers to 2 decimal places. Answer is not complete. Numerator Denominator Earnings per share Basic $ 300 + 450 = $ 0.67 1. Diluted $ 300 + 452.19 x Basic $ 310 + 450 = $ 0.69 2. Diluted $ 310 470.00 x = Witter House is a calendar-year firm with 450 million common shares outstanding throughout 2024 and 2025. As part of its executive compensation plan, at January 1, 2023, the company had issued 35 million executive stock options permitting executives to buy 35 million shares of stock for $15 within the next eight years, but not prior to January 1, 2026. The fair value of the options was estimated on the grant date to be $3 per option. In 2024, Witter House began granting employees stock awards rather than stock options as part of its equity compensation plans and granted 20 million restricted common shares to senior executives at January 1, 2024. The shares vest three years later. The fair value of the stock was $16 per share on the grant date. The average price of the common shares was $16 and $25 during 2024 and 2025, respectively. The stock options qualify as an incentive plan. The restricted stock does not. The company's net income was $300 million and $310 million in 2024 and 2025, respectively. Required: 1. Compute basic and diluted earnings per share for Witter House in 2024. 2. Compute basic and diluted earnings per share for Witter House in 2025. Note: Do not round intermediate calculations. Except for per share amounts, enter your answers in millions (i.e., 10,000,000 should be entered as 10). Round "Earnings per share" answer to 2 decimal places. Round "Denominator" answers to 2 decimal places. Answer is not complete. Numerator Denominator Earnings per share Basic $ 300 + 450 = $ 0.67 1. Diluted $ 300 + 452.19 x Basic $ 310 + 450 = $ 0.69 2. Diluted $ 310 470.00 x =

Answer rating: 100% (QA)

Answer To compute the basic and diluted earnings per share EPS for Witter House in 2024 and 2025 we need to adjust the numerator and denominator appropriately for each scenario Lets calculate it step ... View the full answer