Exercise 16-24

The Sage Corporation issued 10-year, $4,390,000par,7% callable convertible subordinated debentures on January 2, 2017. The bonds have a par value of $1,000, with interest payable annually. The current conversion ratio is13:1, and in 2 years it will increase to19:1. At the date of issue, the bonds were sold at96. Bond discount is amortized on a straight-line basis. Sage's effective tax was35%. Net income in 2017 was $7,950,000, and the company had2,185,000shares outstanding during the entire year.

(a)Compute both basic and diluted earnings per share.(Round answers to 2 decimal places, e.g. $2.55.)

Basic earnings per share$

Diluted earnings per share$