1. Dun & Harvey Inc. has 10,000,000 shares of $1 par value common stock outstanding at January 1. On May 1, Dun & Harvey issued 1,200,000 shares at a cost of $32 per share. In addition, at December 31, 2018, 150,000 shares were issuable upon exercise of executive stock options, which an exercise price of $75 per share.

The average market price of the companys stock was $100 per share.

Dun & Harvey Inc. also has two convertible securities.

1. Convertible bonds, $5,000,000 face value, 6% interest, convertible into 200,000 shares of common stock. There are 5 warrants issued with each bond with a strike price of $110.

2. 10,000 shares of $100 par value convertible preferred stock with a dividend rate of 5.5%. Each $100 par value share is convertible into 20 shares each.

During 2018, Dun & Harveys net income was $20,800,000 and all preferred stock dividends were declared and paid. The companys tax rate is 20%.

Instructions

Compute the diluted earnings per share for 2018.