A Company Had Net Income of $250,000

question 178

Multiple Choice

A company had net income of $250,000.On January 1,there were 12,000 shares of common stock outstanding.On May 1,the company issued an additional 9,000 shares of common stock.The company declared a $7,900 dividend on its noncumulative,nonparticipating preferred stock.There were no other stock transactions.The company had an earnings per share of:

• A)$13.45
• B)$13.89
• C)$11.53
• D)$26.90
• E)Amount cannot be determined as problem does not state if there are any dividends in arrears

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Definitions:

Long-Run Equilibrium

A state in economics where all factors of production and outputs in an industry or market adjust fully to any changes, leading to a stable condition where no participant has an incentive to change behavior.

Spillovers

Economic events in one context that have effects on a third party or in a different context, often external to the initial economic activity.

Marginal Cost

The additional cost incurred by producing one extra unit of a good or service.