Big Apple Cabins Has Net Income of $725,000

question 11

Multiple Choice

Big Apple Cabins has net income of $725,000.Throughout the year,the company had 150,000 shares of common stock outstanding.Also,the company has 25,000 shares of preferred stock that pay a dividend of $5.00 per share that is convertible into 5 shares of common stock for each share of preferred.The preferred stock is considered to be dilutive.The tax rate for Big Apple Cabins is 40%.What are the diluted earnings per share for Big Apple Cabins?

• A)$2.00
• B)$2.25
• C)$2.50
• D)$2.64
• E)$4.00