At December 31, 2015 and 2016, Funk & Noble Corporation had outstanding 1,160 mi

Question

At December 31, 2015 and 2016, Funk & Noble Corporation had outstanding 1,160 million shares of common stock and 17 million shares of 8%, $100 par value cumulative preferred stock. No dividends were declared on either the preferred or common stock in 2015 or 2016. Net income for 2016 was $2,456 million. The income tax rate is 40%.

Calculate earnings per share for the year ended December 31, 2016. (Round your answer to 2 decimal places.)

Calculate earnings per share for the year ended December 31, 2016. (Round your answer to 2 decimal places.)

Explanation / Answer

Preferred dividend = 17 *100 *.08 = 136

2)Net income after tax = 2456 (1-.40)

                                        = 2456 *.60 = 1473.6

3)Earning per share = (Net income after tax -preferred dividend ) / number of shares

                                     = (1473.6 -136 ) / 1160

                                    = 1337.6/ 1160

                                    = $ 1.15 per share

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