Answer (C) is correct . EPS equals the income available for distribution to common shareholders divided by the number of common shares outstanding, or $4.00 [($250,000 NI – $50,000 preferred dividends) ÷ 50,000 common shares].
Answer (A) is incorrect because The amount of $2.67 includes all outstanding shares, common and preferred, in the denominator.
Answer (B) is incorrect because The amount of $3.33 fails to deduct the preferred dividends from the numerator and includes all outstanding shares in the denominator.
Answer (D) is incorrect because The amount of $5.00 fails to deduct the preferred dividends from the numerator.
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