Peters Corp.’s capital structure was as follows:
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December 31 |
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2005 |
2006 |
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Outstanding shares of stock: |
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Common |
110,000 |
110,000 |
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Convertible preferred |
10,000 |
10,000 |
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During 2006, Peters paid dividends of $3.00 per share on its preferred stock. The preferred shares are convertible into 20,000 shares of common stock and are considered common stock equivalents. Net income for 2006 was $850,000. Assume that the income tax rate is 30%. The diluted earnings per share for 2006 is
- $6.31
- $6.54
- $7.08
- $7.45