Intermediate has 2,000 stock options outstanding for the entire year. Each option can be exchanged for one share of common stock at an exercise price of $20.
In addition, Intermediate has bonds which were issued at par with a face value of $2,000,000 and a 5% interest rate. The bonds were issued on June 30, 2012. Each $1,000 bond is convertible into 20 shares of Intermediate common stock.
Intermediate also has 40,000 shares of %6 convertible, cumulative preferred stock ($100 par value) which was outstanding for the full year. Each preferred share can be converted into 3 shares of common stock, No preferred dividends have been declared for the current year or the preceding 2 years.
Provide basic and diluted earnings per share calculation.
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