Information Concerning the Capital Structure of Shepherd Corporation Follows

question 44

Multiple Choice

Information concerning the capital structure of Shepherd Corporation follows During 2020, 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 2020 was $ 500,000. Assume the income tax rate is 30%. Basic earnings per share for 2020 is

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

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Definitions:

Federal Arbitration Act

A U.S. law that provides for the enforcement of arbitration agreements and allows for the use of arbitration in resolving disputes instead of going to court.

Arbitration Agreement

A contract specifying that disputes will be resolved through arbitration rather than court litigation.

Private Companies

Businesses that are owned by a small number of shareholders or company members, and whose shares are not publicly traded on stock exchanges.

Negotiation

The process of discussing something formally in order to reach an agreement or compromise between parties.