(a) On 31 December 2017, Happy Limited("Happy")had 400,000,000 shares of common stock and 6,000,000 shares of 9%, $100 par value cumulative preference shares issued and outstanding. On 1 April 2018, Happy purchased 48,000,000 shares of its common stock on the open market as treasury stock. Happy declared a 5% bonus issue on 1 July, 2018. 6,000,000 treasury shares were issued on 1 September 2018. Net income for the year ended 31 December 2018 was $300,000,000.

Required:

Compute Happy Limited's Basic Earnings per Share (EPS) for 2018. Answer should be rounded to 2 decimal places.

(b) On 31 December 2017, MayflowerLimited ("Mayflower")had the following common stock and nonconvertible preference stock:

• 300,000 shares of common stock
• 150,000 shares of non-cumulative, nonconvertible preference stock issued and outstanding
• Issued a 4% bonus issue of common stock on May 20 and paid cash dividends of $200,000 and
• $37,500 common and preference stockholders, respectively, on December 20, 2018.

On March 1, 2018, Mayflower issued 30,000 common stock. In keeping with its long-term share repurchase plan, 1,000 shares were retired on July 1. Mayflower's net income for the year ended December 31, 2018 was $1,050,000. The income tax rate is 20%. Besides, as a part of a 2017 agreement for the acquisition of Joy Company Limited, further 11,500 shares (already adjusted for the bonus issue) are to be issued to former Joy shareholders on December 31, 2019, if Joy's 2019 netincome is at least $250,000. In 2018, Joy's net income was $325,000.

As part of an incentive compensation plan, the company granted stock options to top executive management at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised on year from that date. Information concerning the number of options granted and common stock prices follows:

Date Granted Number of Options Granted Share Price ($)

(adjusted for the bonus issue)

31 April 2016 4,000 24

31 May 2017 1,500 33

31 December 2018 3,300 32

During 2018, the average market price of the common shares was $32. None of the stock options or convertible bonds were exercised or converted during the year.

On July 12, 2016, Mayflower issued $400,000 of convertible bonds. Each $1,000 bond is convertible into 30 ordinary shares (adjusted for the bonus issue). On January 1, 2018, the unamortized balance of the bonds was $305,000. The effective interest rate on the bonds was 15%.

Required:

Compute Mayflower Limited's Diluted Earnings per Share (EPS) forthe year ended 31 December 2018. Answer should be rounded to 2 decimal places.