On January $1,2007,$ CM Corporation had $500,000$ shares of common stock outstanding. On March

$1,$ the corporation issued $150,000$ new shares to raise additional capital. On August $1,$ the

corporation declared and issued a $3-$for$-1$ stock split. On November $1,$ the corporation purchased

on the market $300,000$ of its own outstanding shares. The tax rate is $40\%.$

Additional information:

Net Income $$2,500,000$

The following three securities were issued prior to $2007.$

$10\%$ Cumulative Convertible Preferred Stock

Par value $$1,000,1,000$ shares, convertible into $200,000$ shares $($in total, split adjusted$)$ of

common stock $$1,000,000$

Stock Options

Exercisable at the option price of $$20$ per share.

Average market price in $2007,$ $$3060,000$ shares

$8\%$ Convertible Bonds

Sold $2,000$ bonds at par. Each $$1,000$ bond is convertible into $30$ shares $($split adjusted$)$ of common

stock.

$$2,000,000$

Required:

$($a$)$ Compute the weighted average shares outstanding during the year.

$($b$)$ Compute the basic earnings per share for $2007.($Round to the nearest penny.$)$

$($c$)$ Compute the diluted earnings per share.