Meghan Markle Co. had a tax rate of 25% and reported net income of $3,400,000 for the fiscal year ended December 31, 2021. The following details are from the balance sheet of Meghan Markle Co.:

Long Term Debt:

Bonds Payable, face value $1,000,000 (1,000 bonds at a face value of $1,000 each), issued in 2012, maturing September 30, 2027, 5%, convertible into common shares at the investor's option at the rate of eight shares per $1,000 bond.

Bonds Payable, face value $3,000,000 (3,000 bonds at a face value of $1,000 each), issued in 2010, maturing June 30, 2035, 7%, convertible into common shares at the investor's option at the rate of 30 shares per $1,000 bond.

Shareholders' Equity:

Preferred Shares, 800,000 shares outstanding, $0.50 cumulative, convertible into common shares at the rate of one common share for each preferred share.

Common Shares, 1,500,000 shares outstanding

ADDITIONAL INFORMATION:

• Dividends for the cumulative preferred shares have been declared and paid up to date for all years, including 2021.
• Options were granted by the company in 2019 to purchase 30,000 shares at $40 per share. Although no options were exercised during 2021, the average price per common share during 2021 was $50 per share.
• There were no issuances of common or preferred shares during the 2021 fiscal year, no conversions of either bonds or preferred shares, and no options were exercised.

REQUIRED:

1. Calculate Basic Earnings Per Share (EPS) for 2021. (1 Mark)
2. Calculate Diluted Earnings Per Share (EPS) for 2021. (9 Marks)