5. The following information was taken from the books and records of Simonic, Inc.:

(i) Net Income $ 560,000

(ii) Capital structure:

(a) Convertible 6% 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. $ 300,000

(b) $10 par common stock, 200,000 shares issued and outstanding during the entire year. $2,000,000

(c) Stock options outstanding to buy 16,000 shares of common stock at $20 per share.

(iii) Other information:

(a) Bonds converted during the year NONE

(b) Income tax rate 30%

(c) Average market price per share of common stock during year $32

(d) Warrants were outstanding the entire year

(e) Warrants exercised during the year NONE

REQUIRED:

(a) Compute diluted earnings per share.