1. During 2007 Picked-on Corp. had Net Income of $100,000 after interest expense of $30,000 on convertible bonds. $300,000 of 10% convertible bonds can be converted into common stock at the rate of 250 shares per $1,000 bond. Prior to the conversion there were 400,000 shares of common stock outstanding. The fully diluted earnings per share is:

1. $0.25.
2. $0.27.
3. $0.50.
4. None of the above.