Question

McDonnell-Myer Corporation reported net income of $900 million. The company had 434 million common shares outstanding at January 1 and sold 24 million shares on Feb. 28. As part of an annual share repurchase plan, 6 million shares were retired on April 30 for $28 per share. Calculate McDonnell-Myer's earnings per share for the year. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Answer 1

To calculate McDonnell-Myer Corporation's earnings per share (EPS) for the year, we need to take into account the changes in the number of outstanding shares. Given the number of shares outstanding at different times and the net income, we can calculate the weighted average number of shares and use it to find the EPS.

Step-by-step explanation:

To calculate McDonnell-Myer Corporation's earnings per share (EPS) for the year, we need to take into account the changes in the number of outstanding shares. First, we need to calculate the weighted average number of shares.

Given that the company had 434 million common shares outstanding at January 1, sold 24 million shares on Feb. 28, and retired 6 million shares on April 30, the weighted average number of shares is calculated as follows:

Weighted Average Shares = (Number of shares outstanding on January 1 × Number of months) + (Number of shares sold on February 28 × Number of months) + (Number of shares retired on April 30 × Number of months)

EPS = Net Income / Weighted Average Shares

By plugging in the numbers, we can calculate the earnings per share.

EPS = $900 million / (434 million shares × 12 months + 24 million shares × 10 months + 6 million shares × 8 months)