On December 31, 2017, Berclair Inc. had 260 million shares ofcommon stock and 6 million shares of 9%, $100 par value cumulativepreferred stock issued and outstanding. On March 1, 2018, Berclairpurchased 24 million shares of its common stock as treasury stock.Berclair issued a 5% common stock dividend on July 1, 2018. Fourmillion treasury shares were sold on October 1. Net income for theyear ended December 31, 2018, was $200 million. The income tax rateis 40%. Also outstanding at December 31 were incentive stockoptions granted to key executives on September 13, 2013. Theoptions are exercisable as of September 13, 2017, for 30 millioncommon shares at an exercise price of $56 per share. During 2018,the market price of the common shares averaged $70 per share. In2014, $62.5 million of 8% bonds, convertible into 6 million commonshares, were issued at face value.
Required: Compute Berclair’s basic and diluted earnings pershare for the year ended December 31, 2018.
