The Following Information Was Extracted from Smurm Corporation's 2006 Annual

question 39

Multiple Choice

The following information was extracted from Smurm Corporation's 2006 annual report:
$\begin{array}{l}\begin{array}{|l|r|}\hline\text { Common stock }\\\hline \text { Shares outstanding } 12 / 31 / 05 & 90 \text { Million } \\\hline \text { New shares issued } 4 / 1 / 06 & 10 \text { Million } \\\hline \text { Shares outstanding } 12 / 31 / 06 & 100 \text { Million } \\\hline \text { Preferred stock } & \\\hline \$ 10 \text { par, } 10\% \text {, convertible into } 2 \text { shares of common stock, shares } & \\\hline \text {Outstanding }&50 Million\\\hline \text {Options }\\\hline \text { 1 Million options, each to purchase one common share at \( \$ 50 \) per}\\\hline \text {Share }\\\hline \text {Market price of stock }\\\hline \text { Average for year}& \$ 75 \\\hline \text { Beginning of year}& \$ 70\\\hline \text {End of year }&\$ 78\\\hline \text { Preferred dividends paid}&\$ 50,000,000 \\\hline \text {Net Income for 2006 }&\$ 350,000,000\\\hline\end{array}\end{array}$
-Diluted earnings per share for 2006 was:

• A) $3.52
• B) $3.07
• C) $2.00
• D) $2.03
• Tecktroniks Company reported in its annual report software refinement expenses of $12M, 15M and 18M for fiscal years 2005, 2006 and 2007, respectively. At the end of fiscal 2007, it had total assets of 140M. Net income was 20M for fiscal 2007, and it had a marginal tax rate of 35%.

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Definitions:

Hyperglycemia

A condition characterized by an abnormally high level of glucose in the blood.

Heat Exhaustion

A condition resulting from exposure to high temperatures, characterized by dehydration, heavy sweating, and fatigue, often progressing to heat stroke if not treated.

Heatstroke

A severe form of hyperthermia resulting from prolonged exposure to high temperatures, causing the body's temperature regulation system to fail.

Profuse Perspiration

The condition of sweating excessively, often unrelated to heat or exercise.