Reference no: EM132599953

On January 1, 2020, Ivanhoe Company issued 10-year, $2,150,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Ivanhoe common stock. Ivanhoe's net income in 2020 was $518,950, and its tax rate was 20%. The company had 97,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020.

Question (a) Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. $2.55.)

Question (b) Compute diluted earnings per share for 2020, assuming the same facts as above, except that $970,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Ivanhoe common stock. (Round answer to 2 decimal places, e.g. $2.55.)