Basic EPS Question 436, additional, beginning, following, getting

JustasS

The following information pertains to Bender, Inc., for last year:
Net income of $25 million
1 million shares of $10 par value preferred stock outstanding paying a 10% dividend
50 million shares of common stock outstanding at the beginning of the year
Issued an additional 5 million shares of common stock on 7/1
What is Bender, Inc.’s basic earnings per share (EPS)?
A) $0.384.
B) $0.476.
C) $0.436.
D) $0.457
I am getting a differenet answer than Schweser, need to see someone else do this.
Thanks

irlfaan7

Just figured out my problem…. I was using 100,000 as the preferreds dividend (1,000,000 * .10). Should actually be (10 * .10)(1,000,000) = $1,000,000
right?

torontoanalyst

Yes, 1,000,000 is the correct amount for preferred dividends, and the answer should be D.

zephyranalyst

Bingo….answer should be D.

JPSem

yes anwser will be D
Basic EPS = net income  prefered Divident

Wr .Avg share of common
25,000,000  1,000,000
= 0.457
52500000
Wr .Avg share of common =
(50 million * 12) + (5 Million * 6)
= 52500000
12