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Question

During 2021, ZXC Ltd reported a net income of Rs115,600 and had 200,000 shares of common stock and 1000 preferred stock outstanding for the entire year. Preferred stocks are at 10% dividend and a par value of 100/share. The tax rate is 40%. What is its Earning Per Share (EPS)?

A 0.50 Correct Answer Incorrect Answer
B 0.53 Correct Answer Incorrect Answer
C 0.48 Correct Answer Incorrect Answer
D 0.58 Correct Answer Incorrect Answer
E 0.55 Correct Answer Incorrect Answer

Solution

EPS = Net Income – Preferred Dividend/No of common shares outstanding = 115600 – 10000/ 200000 = 0.53 Preferred dividend = 1000@ par value 100 = 100000@10% = 10000 Note - Tax rate is not used here as net income is given (which is post taxes).

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