During 2014, XX has net income of $725,000. Throughout the year, the company had 150,000 shares of common stock outstanding. Also, the company has 25,000 shares of preferred stock that pay a dividend of $5.00 per share that is convertible into 5 shares of common stock for each share of preferred. The preferred stock is considered to be dilutied. The tax rate for XX is 40%.

a: What is basic earnings per share? Round to the closest cent.

b. What is diluted earnings per share? Round to the closest cent.