The information below pertains to Prancer Company for 2008.

Net income for the year ........................$1,200,000

8% convertible bonds issued at par ($1,000 per bond). Each bond is convertible into

40 shares of common stock. .......................2,000,000

6% convertible, cumulative preferred stock, $100 par value. Each share is convertible

into 3 shares of common stock. .......................3,000,000

Common stock, $10 par value ......................6,000,000

Common stock options (granted in a prior year) to purchase 50,000 shares of common

stock at $20 per share .............................500,000

Tax rate for 2008 ................................40%

Average market price of common stock .................$25 per share

There were no changes during 2008 in the number of common shares, preferred shares, or convertible bonds outstanding. There is no treasury stock.

Instructions

(a) Compute basic earnings per share for 2008.

(b) Compute diluted earnings per share for 2008.