Reference no: EM132779381

Hominem Inc. has 100,000 common shares outstanding. Earnings from continuing operations amounted to $1,680,000 (after tax) for the year ended 31 December 20X4. Hominem's income tax rate is 25%. The company had no discontinued operations. At the end of 20X4, the market price of the company's common shares was $36.

Hominem had these additional components in its capital structure at the end of the year:

• 24,000 cumulative preferred shares outstanding since 20X2; each share is entitled to an annual dividend of $19 per share and is convertible into five shares of common after 30 June 20X9
• 4% debentures amounting to $680,000 were issued on 1 January 20X4. On this issue date, the bonds were recorded at $605,000. The debentures are convertible into 10 shares per $1,000. On 1 January 20X4, similar bonds with no conversion options had a market yield of 8%. Interest is payable annually. 
• Outstanding options permitting the holder to buy 5,000 common shares in 20X6 or later for $44 per share.Required:

Problem 1. Compute basic EPS. (Do not round intermediate calculations and round your answer to 2 decimal places.)

Problem 2. Compute diluted EPS, using a cascade if appropriate. (Do not round intermediate calculations and round your answer to 2 decimal places.)