Burnet Company had 30,000 shares of common stock outstanding on January 1, 2018. On April 1, 2018, the company issued 15,000 shares of common stock. The company had outstanding fully vested incentive stock options for 5,000 shares exercisable at $10 that had not been exercised by its executives. The average market price of common stock was $9. The company reported net income in the amount of $189,374 for 2018. What is the effect of the options?
A) The options are antidilutive.
B) The options will dilute EPS by $.09 per share.
C) The options will dilute EPS by $.33 per share.
D) The options will dilute EPS by $.17 per share.

Question

Quizplus · Accepted Answer

Exercise price is more than market price, so the options are ignored when computing EPS.

Burnet Company Had 30,000 Shares of Common Stock Outstanding on January