During 2011, Devine 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. Devine declared and paid cash dividends of $300,000 and $150,000 to common and preferred shareholders, respectively, during 2011.
On January 1, 2010, Devine issued $2,000,000 of convertible 5% bonds at face value. Each $1,000 bond is convertible into 5 common shares.
Devine's net income for the year ended December 31, 2011, was $6 million. The income tax rate is 20%. What is Devine's basic earnings per share for 2011, rounded to the nearest cent?
a. $5.29
b. $5.57
c $6.50
d. None of these is correct.