Answer:
EPS = 3.37
Explanation:
<u>First step we will calculate the income after paying the preferred dividends</u>
net income 2,950,000
86,000 preferred stock dividends
earnings for common stock: 2,864,000
<u>Then we calcualte the average shares outstanding</u>
Feb 28th 68,000 sold shares
May 15th 770,000 x 5% = 38,500 new shares
July 1st 4,000 shares retired
weighted average shares:
770,000 +68,000 x 10/12 + 38,500 x 7.5/12 - 4,000 x 6/12 = 848729.1667
average shares 848,729
<em>Earning per share</em>
(net income - preferred stock) / weighted average shares outstanding
2,864,000 / 848,729 = 3,.744 = 3.37
