FED Had 100 Common Shares Issued and Outstanding at December

FED had 100 common shares issued and outstanding at December 31,2013.On July 1,2014,FED issued a 10 percent stock dividend.Unexercised stock options to purchase 20 common shares (adjusted for 2014 stock dividend) at $20 per share were outstanding at the beginning and end of 2014.The average market price of FED'S common shares (which was not affected by the stock dividend) was $25 per share during 2014.The ending market price was $40.FED earned interest at 8% and had a 50% tax rate.Net income for the year ended December 31,2014,was $2,200.What was FED'S 2014 diluted earnings per share,rounded to the nearest cent?

A) $17.05
B) $17.17
C) $18.47
D) $18.60

Correct Answer:

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