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sagnik2422
Apr 20, 2014, 09:25 PM
At December 31, 2012 and 2013, Funk & Noble Corporation had outstanding 820 million shares of common stock and 2 million shares of 8%, $100 par value cumulative preferred stock. No dividends were declared on either the preferred or common stock in 2012 or 2013. Net income for 2013 was $426 million. The income tax rate is 40%. Calculate earnings per share for the year ended December 31, 2013.


My confusion : The solution showed 426 (NI) - $16 (pref. dividends) / 820 mil common shares = $.50


They explained the $16 as 8% x 200 mil = 16 mil but I don't get where the $200 mil comes from.


Can someone please explain this with steps?


Thanks

rehmanvohra
Apr 21, 2014, 01:24 AM
200 ml = 2 million shares x $100 par value