Reference no: EM131788735

Assignment

The information below pertains to Alaska Airlines for 2015.

Net income for the year (net of tax) $8,670,000

6% convertible bonds issued at par ($1,000 per bond); each bond is

convertible into 60 shares of common stock $5,000,000

4% convertible, cumulative preferred stock, $100 par value; each share

is convertible into 4 shares of common stock $2,500,000 Common stock, $1 par value $9,500,000

Tax rate for 2015 40%

Average market price of common stock $18 per share

There were no changes during 2015 in the number of common shares, preferred shares, or convertible bonds outstanding. There is no treasury stock.

(a) Compute basic earnings per share for 2015.

(b) Compute diluted earnings per share for 2015.