On December 31, 2017, the Frisbee Company Had 250,000 Shares

question 102

Multiple Choice

On December 31, 2017, the Frisbee Company had 250,000 shares of common stock issued and outstanding. On March 31, 2018, the company sold 50,000 additional shares for cash. Frisbee's net income for the year ended December 31, 2018, was $700,000. During 2018, Frisbee declared and paid $80,000 in cash dividends on its nonconvertible preferred stock. What is the 2018 basic earnings per share (rounded) ?

• A) $2.16.
• B) $3.50.
• C) $3.10.
• D) $2.80.

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold.

Fair Market Value

The price at which an asset would be exchanged between a willing buyer and seller, each having reasonable knowledge of all the relevant facts.

Fair Value Enterprise Method

A valuation technique that estimates the price at which an entire business would change hands, reflecting the present value of future earnings.

Total Assets

represent the summation of everything a company owns, both current and non-current, that can be used for paying debts, investments, or other operations.