Harvey Inc

question 91

Multiple Choice

Harvey Inc. reported net earnings of $700,000 for the year. Harvey has 200,000 shares of common stock outstanding all year. Two years ago, the company granted 20,000 stock options that allow employees to purchase 20,000 shares for $15 each. The company stock has averaged $20 in the market during the year. Compute the basic and diluted EPS.

• A) basic EPS $3.50; diluted EPS $3.41
• B) basic EPS $3.50; diluted EPS $3.50
• C) basic EPS $3.41; diluted EPS $3.41
• D) basic EPS $3.50; diluted EPS $2.34

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Definitions:

Demand Curve

A visual chart that illustrates how the demand quantity of a product or service correlates with its price over a specific time frame.

Socially Efficient

An allocation of resources that results in the maximum possible economic benefit for society.

Marginal Revenue

The extra revenue generated from the sale of an additional unit of a product or service.

Deadweight Loss

The reduction in total surplus that results from a market distortion, such as a tax, subsidy, or price control.