Answer and Explanation:
The computation is shown below:
Operating profit $256,000
Less: interest expense -$33,800
EBT $222,200
Less : taxes -$66,400
Net income $155,800
a.EPS is
= Net income ÷ Common stock outstanding
= $155,800 ÷ 17500
= $8.90
Common dividend per share is
= Common dividends paid ÷ Common stock outstanding
= $38000 ÷ 17500
= $2.17
b.Increase in retained earnings is
= Net income - Preferred dividends - Common dividends
= $155,800 - $31,800 - $38000
= $86,000