Robertson Company had 40,000 shares of common stock outstanding during 2016 and compensatory share options to purchase 5,000 shares of common stock at $10 a share plus a $3 a share unrecognized compensation cost (net of tax). The average market price is $20 a share. The company also had 7% convertible preferred stock on which dividends of $9,000 were declared. Each preferred share is convertible into 6,000 common shares. Robertson's after-tax net income was $88,000, and the tax rate was 40%. Required: Compute 2016 diluted earnings per share for Robertson Company. Robertson Company had 40,000 shares of common stock outstanding during 2016 and compensatory share options to purchase 5,000 shares of common stock at $10 a share plus a $3 a share unrecognized compensation cost (net of tax). The average market price is $20 a share. The company also had 7% convertible preferred stock on which dividends of $9,000 were declared. Each preferred share is convertible into 6,000 common shares. Robertson's after-tax net income was $88,000, and the tax rate was 40%. Required: Compute 2016 diluted earnings per share for Robertson Company.