Catronic Ltd. had 80,000 ordinary shares outstanding in all of 2021. On January 1, 2019, Catronic issued at par $300,000 in 4% bonds maturing on January 1, 2031. Each $1,000 bond is convertible into 20 ordinary shares. Assume that the effective interest rate is 4%.

There are 4,000, $100, outstanding cumulative preferred shares that are each entitled to an annual dividend of $2. Dividends of $5,000 were declared on December 15, 2021, and paid on January 6, 2022. Each preferred share is convertible into three ordinary shares. 

Catronic’s net income for the year ended December 31, 2021, was $300,000. Its income tax rate was 30%.

Required:

a. Calculate Catronic’s basic EPS for 2021. 

b. Are the convertible bonds dilutive or antidilutive in nature? The convertible preferred shares? 

c. Calculate Catronic’s diluted EPS for 2021.