Question $2(25$ marks$)$On $1$ January $2023,$ the following share capital structure is shown on the book of SilverCompany $($Silver$)$:

Number of shares of Ordinary shares and $2\%$ non$-$convertible andcumulative preference shares are $100,000$ and $12,500.$

Total issued amount of Ordinary shares and $2\%$ non$-$convertible andcumulative preference shares are $$100,000$ and $$25,000$

During the year, Silver has recorded the following transactions:

$1$ April: Issued $2,500$ ordinary shares

$1$ June: $2-$for$-1$ share splits

$1$ October: Repurchased $10,000$ ordinary shares at $$10$

Silver issued $$500,000$ of $8\%$ convertible bonds at face value during $2023.$ Each $$500$ bond isconvertible into $25$ ordinary shares. Top executives were granted $10,000$ options to buyordinary shares at $$20$ if the net income is over $$400,000.$

The beginning and ending market price of the ordinary shares was $$24$ and $$26$ respectivelyduring the year $2023.$

At the financial year$-$end, Silver declared and paid $$2\mathrm{.}5$ cash dividends to all ordinary shareholders and the relevant corporate tax rate was $40\%.$ The net income for $2023$ is $$625,000.$

Required: $($Answers must be rounded to $4$ decimal places$)$

$($a$)$ Compute the following for Silver for the year ended December $31,2023$:

$($i$)$ Basic earnings per share. $(11$ marks$)$

$($ii$)$ Diluted earnings per share. $(10$ marks$)$

$($b$)$ Assume the options exercisable for $10,000$ shares is at an exercise price of $$27$ per sharegranted in $2023,$ explain how does it affect your answer in part $($a$)($ii$)$ above? $(4$ marks$)$