Zambrano Company’s net income for 2015 is £40,000. The only potentially dilutive securities outstanding were 1,000 options issued during 2014, each exercisable for one share at £8. None has been exercised, and 10,000 ordinary shares were outstanding during 2015. The average market price of Zambrano’s shares during 2015 was £20.

Instructions

(a) Compute diluted earnings per share. (Round to two decimal places.)

(b) Assume the same facts as those assumed for part (a), except that the 1,000 options were issued on October 1, 2015 (rather than in 2014). The average market price during the last 3 months of 2015 was £20.