Reference no: EM133159851
Question - At the end of 2021, River Co. had 300,000 shares of $5 par common stock outstanding, and 60,000 shares of $20 par convertible noncumulative 6% preferred stock outstanding. Each preferred share can be converted into 2 shares of common stock. During 2022:
On January 1, 2022, River issues $1,500,000 of 10-year, 4% convertible bonds at par. The bonds are convertible into 75,000 shares of common stock. The bonds pay interest annually at December 31 each year. No bonds are converted in 2022.
River has 15,000 outstanding stock options with an exercise price of $18 and 5,000 outstanding stock options with an exercise price of $24. The average market price of River's stock was $20 throughout 2022.
On June 30, 2022, River awards 30 employees each with 200 shares of common stock. The shares vest after 3 years. On the grant date, the market price of River's stock is $22.
On September 30, 2022, River purchases 80,000 common shares for treasury.
River's net income for 2022 is $2,750,000. The standard preferred dividend was declared during 2022.
River's 2022 tax rate is 21%.
a. What is River's basic EPS for 2022?
b. What is River's diluted EPS for 2022?
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