A firm has preferred equity outstanding but has not declared payment of dividend on it. If the firm's net income is 1000 and there are 100 common shares outstanding, the firm's Basic EPS is ________.
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A. B. C. D.C
Even when preferred dividends have not been declared, they must be subtracted from net income while calculating Basic EPS since no dividends can be paid on common share unless the preferred dividends are paid. Basic EPS includes only the amount that is available for distribution on common shares.