1.Alciatore Company earned a net income of $150,000 in 2013. The weighted average number of common shares outstanding for 2013 was 40,000. The average stock price for 2013 was $33. Assume an income tax rate of 40%.
Required:
For each of the following independent situations, indicate whether the effect of the security is antidilutive for diluted EPS.
1. 10,000 shares of 7.7% of $100 par convertible, cumulative preferred stock. Each share may be converted into two common shares.
2. 8% convertible 10 year, $500,000 of bonds, issued at face value. The bonds are convertible to 5,000 shares of common stock.
3. Stock options exercisable at $30 per share after January 1, 2015.
4. Warrants for 1,000 common shares with an exercise price of $35 per share.
5. A contingent agreement to issue 5,000 shares of stock to the company president if net income is at least $125,000 in 2014.