What will Smith report as its diluted earnings per share

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Question - Throughout 2015, Smith had 520,000 shares of common stock outstanding. Smith's net income for the year ended December 31, 2015 was $4,688,000. Smith's income tax rate is 22%.

During the entire year ending 12-31-15, Smith had 40,000 outstanding employee stock options. Each option had an exercise price of $40 per share of Smith common stock. During the year ended 12-31-15, the average market price of Smith's common stock was $50 per share.

As of 12-31-15, Smith had $6,000,000 of 4% convertible bonds. Smith issued the bonds at face value during 2012. The bonds can be converted into 200,000 shares of Smith's common stock.

Required - What will Smith report as its diluted earnings per share for the year ended 12-31-15?

Reference no: EM132772107

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