The following information is from the financial statements of Complex Capitalists for 1997 and 1998:
Dec. 31, 1997 - 1 million common shares outstanding, capital structure all-equity
March 31, 1998 - issued 200,000 common shares.
May 31, 1998 - issued 800,000 warrants exercisable at a strike of 35.
The stock price on Dec. 31, 1998 was 37. The average price during 1998 was 34 and the maximum price was 39. How many shares will the basic EPS computation for 1998 use?
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A. B. C. D.B
Basic EPS will ignore the warrants and calculate the weighted number of common stock outstanding for 1998. The newly issued share were outstanding for 9 months and hence weighted # of shares used = 1 million + 3/4*200,000 = 1.15 million.