Net Income $280,000

Capital Structure:

Convertible 6% bonds. Each of the 300, $1,000 bonds is convertible into 50 shares of common stock at the present date and for the next 10 years $300,000

$10 par common stock, 200,000 shares issued and outstanding duringthe entire year. $2,000,000

Stock warrants outstanding to buy 16,000 shares of common stock at $20 per share.

Other Information:

Bonds converted during the year None

Income Tax Rate 30%

Convertible debt was outstanding the entire year

Average market price per share of common stock during year $32

Warrants were outstanding the entire year

Warrants exercised during the year None

Compute basic and diluted earnings per share.