The given information applies to the Steve Corp for 2008:
Transactions in Common Shares Change Shares Outstanding
1/1/08 Beginning Shares Outstanding 1,000,000
3/1/08 Purchases of Treeasury Shares (600,000) 940,000
6/1/08 Stock Split 2 –for – 1 940,000 1,880,000
11/1/08 Issuance of Additional shares 120,000 2,000,000
Outstanding Stock Options (Granted in 2006)
Option for 60,000 shares exercisable at a alternative price of $25 per share Average 2008 market price was $30 per shared, ( Market price and
option price previously adjusted for stock split)
Convertible Bonds (Issued December1, 2008)
$5 million of 4% bonds convertible to 400,000 shares of common stock.
Net income in 2008 was $3,200,000 Steve’s tax rate is 35%
1) Calculate basic earnings per share for 2008
2) Calculate diluted earnings per share for 2008.