(Answered) Question - use the following information to answer

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Question - Use the following information to answer questions. During 2016, Angel Corporation had 900,000 shares of common stock and 50,000 shares of 6% preferred stock outstanding. The preferred stock does not have cumulative or convertible features. Angel declared and paid cash dividends of $300,000 and $150,000 to common and preferred shareholders, respectively, during 2016.

On January 1, 2015, Angel issued $2,000,000 of convertible 5% bonds at face value. Each $1,000 bond is convertible into five common shares.

Angel's net income for the year ended December 31, 2016, was $6 million. The income tax rate is 20%.

What is Angel's basic earnings per share for 2016, rounded to the nearest cent?

a. $5.29.

b. $5.51

c. $6.50.

d. $5.50.

What is Angel's diluted earnings per share for 2016, rounded to the nearest cent?

a. $6.43.

b. $6.25.

c. $6.22.

d. $6.52.

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