Please use the following information to answer problems: 77 and 78.

Common stock outstanding = 1,000,000 shares

Preferred stock = 500,000 shares

Convertible bonds = $5,000,000, 6% convertible to 200,000 shares

Net income = $3,000,000

Preferred dividends = $50,000

Tax rate = 35%

77. What is the basic earnings per share of common? (please select closest answer)

a. $2.95

b. $60

c. $7.10

d. $3.25

78. Assuming convertible bonds outstanding, what is the diluted earnings per share of common? (please select closest answer)

a. $3.80

b. $2.00

c. $1.75

d. $2.62