Gamma pic had an issued share capital at I April 20X0 of:

• £200,000 made up of 20p shares; and

• 50,000 £ I convertible preference shares classified as equity receiving a dividend of £2.50 per share. These shares were convertible in 20X6 on the basis of one ordinary share for one preference share.

There was also loan capital of:

• £250,000 10% convertible loans. The loan was convertible in 20X9 on the basis of 500 shares for each £ 1,000 of loan, and the tax rate was 40%.

Earnings for the year ended 3 I March 20X1 were £5,000,000 aftertax.

Required:

(a) Calculate the diluted EPS for 20X1.

(b) Calculate the diluted EPS assuming that the convertible preference shares were receiving a dividend of £6 per share instead of £2.50.