The Following Information Has Been Provided to You by the Rae

question 6

Multiple Choice

The following information has been provided to you by the Rae Corporation for the year ending December 31,2015:
• Net income was $979,000.
• Cash dividends totaling $120,000 were paid to the common shareholders.
• 6% convertible bonds with a par value of $2,000,000 were issued on February 1,2015.
• The corporation's marginal income tax rate is 40%.
• 6% convertible preferred stock with a par value of $800,000 was outstanding during the entire year.
Assuming that both the bonds and preferred stock are dilutive,what is the numerator that should be used in the calculation of basic earnings per share and diluted earnings per share?

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Texting While Driving

The act of composing, sending, or reading text messages, emails, or making similar use of the web on a mobile phone while operating a motor vehicle.

Economically Efficient

A situation in which resources are allocated in a way that maximizes the net benefit to society.

Marginal Private Benefit

Marginal Private Benefit is the additional benefit or satisfaction received by consumers or producers for consuming or producing one more unit of a good or service.

Marginal Private Cost

The cost incurred by a firm or individual resulting from producing one more unit of a good, excluding externalities or effects on third parties.