Online Network Inc. has a net income of $500,000 in the current fiscal year. There are 100,000 shares of common stock outstanding along with convertible bonds, which have a total face value of $1.2 million. The $1.2 million is represented by 1,200 different $1,000 bonds. Each $1,000 bond pays 4 percent interest. The conversion ratio is 20. The firm is in a 20 percent tax bracket.

. Compute basic earnings per share.

Compute diluted earnings per share