Question - Use the following information to answer questions. During 2016, Angel Corporation had 900,000 shares of common stock and 50,000 shares of 6% preferred stock outstanding. The preferred stock does not have cumulative or convertible features. Angel declared and paid cash dividends of $300,000 and $150,000 to common and preferred shareholders, respectively, during 2016.
On January 1, 2015, Angel issued $2,000,000 of convertible 5% bonds at face value. Each $1,000 bond is convertible into five common shares.
Angel's net income for the year ended December 31, 2016, was $6 million. The income tax rate is 20%.
What is Angel's basic earnings per share for 2016, rounded to the nearest cent?
a. $5.29.
b. $5.51
c. $6.50.
d. $5.50.
What is Angel's diluted earnings per share for 2016, rounded to the nearest cent?
a. $6.43.
b. $6.25.
c. $6.22.
d. $6.52.