Reference no: EM132772909

Complex Casting Company has 500,000 shares of common stock outstanding. The company also has the following potentially dilutive securities:

• 50,000 stock options exercisable at $50 each and 60,000 stock warrants exercisable at $35 each. The average market price for the company's common stock is $40/share.
• 25,000 shares of $100 par 5% cumulative preferred stock. Each share of preferred stock is convertible to 4 shares of common stock.
• Net income for the year is $1,000,000 and the company's tax rate is 40%.

Required:

Problem 1: Determine whether each of the potentially dilutive securities is dilutive or anti-dilutive. (You may need to compute Basic EPS and Diluted EPS to determine your answer)

Stock options
Stock warrants
Convertible preferred stock