Weaver company had 100,000 shares of common stock issued and outstanding at january 1. on july 1, weaver issued a 10% stock dividend. unexercised call options to purchase 20,000 shares of weaver’s common stock (adjusted for the stock dividend) at $20 per share were outstanding at the beginning and end of the year. the average market price of weaver’s common stock (which was not affected by the stock dividend) was $25 per share during the year. net income for the year ended december 31 was $550,000. what should be weaver’s diluted earnings per share (deps) for the year?

$4.82

Explanation: Diluted EPS is a calculation used to gauge the quality of a company's earnings per share (EPS) if all convertible securities were exercised. It can be said to be a profitability calculation that measures the amount of income each share will receive if all of the diluted securities are realized

From the above question, the DEPS is calculated thus:

Proceeds from unexercise call options(20,000 shares × $20)=$400,000

Treasury shares = $400,000/$25 = 16,000

Purchased shares = 20,000 -16,000 = 4,000

Therefore Incremental shares = 4,000

The incremental shares of 4,000 + 100,000+10% stock dividend of 10,000 = 114,000 shares.

DEPS = $550,000/114,000 = 4.82

i would say iii (3) because in order to compare a price you have to use as a reference other near stores because it's its

hope i explained myself

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