The net income for Black Mickey Inc. for the year ended December 31, 2020 was $1,400,000. BMI had 40,000 ordinary shares outstanding at the beginning of the year. Select details of BMI's liabilities and equities follow:

Bonds A$1,400,000, 10%, 10-year, semi-annual bonds were issued on July 1, 2017. At the option of the holder, each $1,000 bond can be converted into 20 ordinary shares at any time before expiry.

Bonds B$1,000,000, 6%, 10-year, semi-annual bonds were issued on July 1, 2020. At the option of the holder, each $1,000 bond can be converted into 10 ordinary shares at any time before expiry.

Stock Options 10,000 options that are exercisable by senior management. The average market price is $30, the option price is $20 per share.

BMI's corporate tax rate was 30%.

Required:

Assuming that the effective rate of interest on the bonds equals the coupon rate:

a. Calculate BMI's basic earnings per share for 2020.

b. Prepare a schedule that sets out the income effect, share effect, and incremental EPS for each security that is convertible into ordinary shares. Rank the potential ordinary shares by their dilutiveness.

c. Calculate BMI's diluted earnings per share for 2020.