During 2018, Falwell Inc

question 52

Multiple Choice

During 2018, Falwell Inc. had 500,000 shares of common stock and 50,000 shares of 6% cumulative preferred stock outstanding. The preferred stock has a par value of $100 per share. Falwell did not declare or pay any dividends during 2018. Falwell's net income for the year ended December 31, 2018, was $2.5 million. The income tax rate is 40%. Falwell granted 10,000 stock options to its executives on January 1 of this year. Each option gives its holder the right to buy 20 shares of common stock at an exercise price of $29 per share. The options vest after one year. The market price of the common stock averaged $30 per share during 2018.
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What is Falwell's diluted earnings per share for 2018, rounded to the nearest cent?

• A) $3.14.
• B) $4.90.
• C) $4.34.
• D) Cannot determine from the given information.

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Definitions:

Negotiators

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A professional specializing in handling the relationship between employers and their workers, often dealing with unions and collective bargaining.

Negotiations

The process of discussing terms and conditions between two or more parties to reach a mutual agreement or resolve differences.