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Anchor, Inc. had income after taxes of $$500,000$ for the current year. An average of $125,000$

shares of Anchor's common stock was outstanding for the entire year, and $130,000$ shares were

outstanding at year$-$end. In addition, options were outstanding throughout the year to buy $12,000$

shares of Anchor common stock at $$7\mathrm{.}50$ per share. During the year, Anchor's common stock

had an average market price of $$9$ per share. The stock was selling for $$10$ per share at year$-$end.

Anchor is subject to a $34$ percent tax rate and amortizes its bonds using a straight$-$line method.

Anchor had the following convertible securities outstanding throughout the current year:

$6\%,$ cumulative, convertible preferred stock. Each $$10$ par value share is convertible into $1\mathrm{.}5$

common shares. A total of $$100,000$ par value is outstanding.

$8$ percent, $10-$year, $$1,000$ par convertible bonds that were issued at $105.$ Total par value

outstanding is $$100,000.$ Each bond converts into $90$ shares of common stock.

$13$ percent, $5-$year, $$1,000$ par convertible bonds that were issued at $97.$ Total par value

outstanding is $$30,000.$ Each bond converts into $30$ shares of common stock.

$7$ percent, $8-$year, $$1,000$ par convertible bonds that were issued at $95.$ Total par value

outstanding is $$60,000.$ Each bond converts into $20$ shares of common stock.

An $11\%,20-$year, $$1,000$ par convertible bonds that were issued at face value. The total par

value outstanding is $$500,000.$ Each bond converts into $10$ shares of common stock.

Required:

Calculate Anchor Inc.$\text{'}$s basic and diluted EPS for the current year.

Note: Use straight$-$line amortization for all the bonds. For example, if you have a $15$ year, $10\%,$

$$1,000$ face value bond issued at $85$ and a $$150$ discount at issue, then $$10$ will be amortized

each period using straight line amortization. You would have the following:

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