Assume that the following data relate to Rosen, Inc. for the year 2015:

Net income (40% tax rate) $3,500,000

Average common shares outstanding 2015 1,000,000 shares

8% cumulative convertible preferred stock:

Convertible into 80,000 shares of common $2,000,000

5% convertible bonds; convertible into 75,000

shares of common $4,000,000

Stock options:

Exercisable at the option price of $30 per share;

average market price in 2015, $35 84,000 shares

Instructions

Compute (a) basic earnings per share, and (b) diluted earnings per share.