Question

Stanley Corp. had 100,000 shares of common stock outstanding throughout 2004. It also had 20,000 stock options with an exercise price of $20 and another 20,000 options with an exercise price of $28. The average market price for the company's stock was $25 throughout the year. The stock closed at $30 on December 31, 2004. What are the number of shares used to calculate diluted earnings per share for the year?

Answer 1

104,000

Step-by-step explanation:

Calculation to determine the number of shares used to calculate diluted earnings per share for the year

Using this formula

Number of shares=Additional shares+Common shares outstanding

Let plug in the formula

Number of shares=(20,000 − [(20,000 × 20) / 25])+100,000

Number of shares=4,000+100,000

Number of shares=104,000

Therefore the number of shares used to calculate diluted earnings per share for the year is 104,000