Charter Company earned net income of \(\$ 48,000\) in 2020. The company had 10,000 shares of common stock outstanding during the year and 1,000 shares of noncumulative preferred stock, each convertible into 5 shares of common stock with \(\$ 10\) par value per share. The relevant tax rate is \(25 \%\). During the year, Charter Company declared and paid \(\$ 5,000\) in preferred dividends and no common stock dividends.

a. Compute basic earnings per share.

b. Compute diluted earnings per share.