Compute WestCo basic EPS for the year ended December

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Question - WestCo began 2016 with 800,000 common shares outstanding. On February 29, 2016, 70,000 new shares were issued at a price of $36 per share. The market price has risen steadily since that time to a high of $43 per share at December 31. No other changes in shares occurred during 2016, and no securities are outstanding that can become common shares. However, there are two agreements with officers of the company for future issuance of common shares. Both agreements relate to compensation arrangements reached in 2015. The first agreement grants to the company president a right to 30,000 common shares each year the closing market price is at least $41. The agreement begins in 2016 and expires in 2021. The second agreement grants to the controller a right to 25,000 common shares if she is still with the firm at the end of 2023. Net income for 2016 was $3,000,000, and the controller was still employed by the firm. Please make sure your final answer(s) are accurate to 2 decimal places.

(a) Compute WestCo's basic EPS for the year ended December 31, 2016.

(b) Compute WestCo's diluted EPS for the year ended December 31, 2016.

Reference no: EM132815299

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