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On 1 October 20X3, Hoy had $2.5 million of equity shares of 50 cents each in issue.
No new shares were issued during the year ended 30 September 20X4, but on that date there were outstanding share options to purchase 2 million equity shares at $1.20 each. The average market value of Hoy’s equity shares during the year was $3 per share.
Hoy’s profit after tax for the year ended 30 September 20X4 was $1,550,000.
What is Hoy’s diluted earnings per share for the year ended 30 September 20X4?Hi can you please explain why the $2.5 million shares is multiplied by 2 when calculating the DEPS?
This question is from the Kaplan Exam Kit Q. 128
Thank You!Because £2.5 million dollars worth of 50 cent shares means that there are 5 million shares of 50 cents each = $2.5 million
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