On December 31, 2023, Chi Chow Company had outstanding 500,000 shares of common stock and 50,000 shares of 8% cumulative preferred stock (par $10).

February 28, 2024, issued an additional 46,000 shares of common stock

September 1, 2024, 10,000 shares were retired.

A 12% stock dividend was declared and distributed on July 1, 2024.

At year-end, there were fully vested incentive stock options outstanding for 40,000 shares of common stock (adjusted for the stock dividend). The exercise price was $18. The market price of the common stock averaged $20 during the year. Also outstanding were $1,000,000 face amount of 10% convertible bonds issued in 2021 and convertible into 60,000 common shares (adjusted for the stock dividend). Net income was $1,000,000. The tax rate for the year was 25%.

Required:

Compute basic and diluted EPS for the year ended December 31, 2024.

Note: Round your answers to 2 decimal places.

please explain your answer so i can learn from it.