Throughout 2014, H had 2,660,000 shares of common stock issued and outstanding and 100,000 shares of 6%, $100 par value convertible preferred stock issued outstanding. Each share of preferred stock can be converted into 15 shares of B’s common stock. H’s net income for 2014 was $9,600,000. During 2014 H paid $600,000 of preferred dividends. H’s income tax rate is 25%.

• As of 12-31-14, H had $2,000,000 of 5%, 10-year convertible bonds outstanding. H issued the bonds at par during 2011. The bonds can be converted into 40,000 shares of H’s common stock.

• As of 12-31-14, H had $10,000,000 of 10%, 15-year convertible bonds. H issued the bonds at par during 2004. The bonds can be converted into 200,000 shares of H’s common stock.

• As of 12-31-14, H had $6,000,000 of 7%, 40-year convertible bonds. H issued the bonds at par during 1980. The bonds can be converted into 300,000 shares of H’s common stock.

• During the entire year ending 12-31-14, H had 480,000 outstanding and exercisable employee stock options that were granted to employees during 2013. Each option has an exercise price of $60 per share of H common stock. During 2014, the average market price of H’s common stock was $90 per share.

• During the entire year ending 12-31-14, H had 120,000 outstanding and exercisable employee stock options that were granted to employees during 2010.

Each option has an exercise price of $100 per share of H common stock.

What will H report as basic EPS for the year ended 12-31-14? ROUND TO NEAREST PENNY.

What will H report as diluted EPS for the year ended 12-31-14? ROUND TO NEAREST PENNY.

Answer rating: 100% (QA)

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