Burnet Company had 30,000 shares of common stock outstanding on January 1, 2013. On April 1, 2013, 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 2013. 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

The options are antidilutive because the exercise price of $10 is higher than the average market price of $9, meaning exercising the options would not be beneficial and would not dilute EPS.

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