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Fairview Corporation recorded the following in 2018: After-tax net income was $20 million in 2018. The actual share count at the beginning of the year was 10.0 million. Fairview repurchased 2 million shares at $12/share in the middle of 2018. Fairview issued preferred dividends of $3 million and common dividends of $2 million. Fairview issued 4 million stock options in 2018 that begin to vest in 2019. Calculate 2018 basic earnings per share (EPS).

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Nyctalus

Answer: $1.89

Explanation: As, we know that :-

[tex]Basic\:EPS=\frac{net\:income\:for\:common\:shareholders}{no.\:of\:shares}[/tex]

where,

net income for common shareholders = net income - preferred dividend

                                                                   = $20 - $3 = $17

[tex]No.\:of\:shares=10\times \frac{12}{12}-2\times \frac{6}{12}[/tex]

                                 = 9 shares

so putting the values into equation we get :-

[tex]Basic\:EPS=\frac{\$17}{9shares}[/tex]

                 = $1.89