4. The following information was taken from the books and records of Apple, Inc.:

Net income $ 270,000

Capital structure:

a. Convertible 5% bonds. Each of the 300, $1,000 bonds is convertible

into 50 shares of common stock at the present date and for the next 10 years.

b. $1 par common stock, 40,000 shares issued and outstanding

during the entire year.

c. Stock options outstanding to buy 11,000 shares of common stock

at $27 per share.

Other information:

a. Bonds converted during the year None

b. Income tax rate 30%

c. Convertible debt was outstanding the entire year

d. Average market price per share of common stock during the year $30

e. Options were outstanding the entire year

f. Options exercised during the year None

Compute basic earnings per share. (2 points)

Compute the diluted earnings per share. (5 points)