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solution

1730000

OR

b. 1700000

c. none of the above, the correct answer is ____.

Sonic Ltd. had 1,400,000 average ordinary shares outstanding during all of 2020. During 2020, Sonic also had 70,000 options outstanding with exercise prices of $20 each. The average stock price of Sonic during 2020 was $35. This company also had 10,000 shares of preferred stock outstanding ($2 dividend per share) for the entire year, each convertible into 25 shares of common stock. The company has $150,000 of 9% bonds, convertible into 50,000 ordinary shares. Sonic had $3,600,000 net income for the year. The corporate tax rate is 30%. Calculate the following for Sonic for 2020:

Question: Calculate the weighted average number of shares outstanding for 2020 if all dilutive securities are converted into ordinary shares at the beginning of the year? Show all workings. (6 Mark)


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