Information Concerning the Capital Structure of Shepherd Corporation Follows

question 9

Multiple Choice

Information concerning the capital structure of Shepherd Corporation follows During 2017, Shepherd paid dividends of $1.00 per common share and $2.50 per preferred share.The preferred shares are non-cumulative, and convertible into 20,000 common shares.The 9% convertible bonds are convertible into 50,000 common shares.Net income for calendar 2017 was $500,000.Assume the income tax rate is 30%.Basic earnings per share for 2017 is

• A)$3.33.
• B)$3.65.
• C)$4.75.
• D)$5.00.

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Definitions:

Defense Mechanism

Mental techniques employed by people to deal with reality and preserve their sense of self.

Rationalization

Denotes a defense mechanism in which controversial behaviors or feelings are justified and explained in a seemingly rational or logical manner to avoid the true explanation.

Hostility

Aggressive behavior or attitudes towards others, often stemming from anger or resentment.

Defense Mechanism

Unconscious tactics employed to shield oneself from the stress stemming from thoughts or feelings that are deemed unacceptable.