On January 1,2014,WXY had stock warrants outstanding to purchase 6,000 shares at an option price of $10.The common shares' market price was $15 the entire year.The firm has 200,000 common shares outstanding at the end of the year.The effect of the warrants on EPS is to:
A) Increase the denominator of all EPS calculations by 6,000 shares.
B) Increase the denominator of all EPS calculations by 2,000 shares.
C) Affect the diluted EPS calculation, but not the basic EPS calculation.
D) Have no potentially dilutive effect on the EPS calculation.
E) Increase the denominator of all EPS calculations by 4,000 shares.
Correct Answer:
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