Reference no: EM133028697
Question - As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows:
Options Granted Date Granted (adjusted for the stock dividend) Share Price
December 31, 2019 18,000 $28
December 31, 2020 13,000 $37
December 31, 2021 16,500 $36
The market price of the common stock averaged $36 per share during 2021.
On July 12, 2019, Dow issued $900,000 of convertible 8% bonds at face value. Each $1,000 bond is convertible into 40 common shares (adjusted for the stock dividend).
Required - Compute Dow's basic and diluted earnings per share for the year ended December 31, 2021.