Ozarka Products Reported $9,500,000 in Net Income for the Current

question 69

Essay

Ozarka Products reported $9,500,000 in net income for the current year. The company had $5,000,000 of 7% cumulative, preferred stock outstanding all year, along with, $10,000,000 of 6% bonds. Each $1,000 bond had 4 detachable stock warrants and each warrant allowed the warrant holders to buy a share of stock for $60. The average share price for the year was $80. Common shares outstanding at the beginning of the year was 4,000,000, but on June 15, the company declared a 10% stock dividend. Compute both basic and diluted EPS when the tax rate is 40%.

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Definitions:

Knowledge Gained

The information or skills acquired through experience or education.

Information

Data that have been organized and processed to be useful to someone for making decisions, understanding a topic, or learning new things.

Manipulated Variable

In experimental research, this is the variable that is changed or controlled by the researcher to observe its effect on the dependent variable.

Dependent Variable

The variable in an experiment that is expected to change as a result of manipulations to the independent variable.