Basics of diluted earnings per share

Reference no: EM13153297

The 2011 net income of Atwater Inc. was $200,000 and 100,000 shares of its common stock were outstanding during the entire year. In addition, there were outstanding options to purchase 10,000 shares of common stock at $10 per share. These options were granted in 2008 and none had been exercised by December 31, 2011. Market prices of Atwater's common stock during 2011 were:

January 1 $20 per share
December 31 $40 per share
Average Price $25 per share

The amount that should be shown as Atwater's diluted earnings per share for 2011 (rounded to the nearest cent) is:

A) $2.00.

B) $1.95.

C) $1.89.

D) $1.86.

Reference no: EM13153297

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