Total Revenues and Net Income for 2011 for Smith Lake

question 116

Multiple Choice

Total revenues and net income for 2011 for Smith Lake Corporation is $3,500,000 and $280,000, respectively. Smith Lake Corporation has had 400,000 common shares of stock outstanding for all of 2011. The selling price of Smith Lake Corporation common stock on December 31, 2011, is $18. Earnings per share for 2011 is:

• A)$ 8.75.
• B)$12.50.
• C)$ 0.70.
• D)$35.00.

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Definitions:

Implied Duration

Estimated time that represents how long it takes for the price of a fixed-income investment to be repaid by its internal cash flows.

Business Trust

A legal arrangement where assets are managed by trustees for the benefit of the trust's beneficiaries, often used in business for tax and estate planning.

Assets

Resources owned or controlled by a business, individual, or entity which have value and can be used to meet debts, commitments, or legacies.

Profits

The financial gain obtained when the revenue from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.