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Compute basic earnings per share

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Question: Myers Drugs Inc. has 2 million shares of stock outstanding. Earnings after taxes are $8 million. Myers also has warrants outstanding that allow the holder to buy 100,000 shares of stock at $15 per share. The stock is currently selling for $50 per share.

a. Compute basic earnings per share.

b. Compute diluted earnings per share considering the possible impact of the warrants. Assume the cash proceeds are used to repurchase shares.

Reference no: EM132748032

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