Question $2$

XYZ Company Ltd has $1,000,000$ $$1$ ordinary shares and $1,000$ $$10010\%$ convertible bonds to be

issued at par value. Each bond is convertible to $20$ ordinary shares on demand, all of which have been in

issue for the whole of the reporting period. XYZ Company Ltd$\text{'}$s share price is $$4\mathrm{.}50$ per share and

earnings for the period are $$500,000.$ The tax rate applicable to the entity is $21\%.$

$($a$)$ What is the basic earnings per share?

$(5$ marks$)$

$($b$)$ What is the diluted earnings per share?

$(5$ marks$)$

$($Total: $10$ marks$)$