Question 3 - Earnings per share [13 marks] Hayruta Limited had the following changes during 2022: 1 January 2023 30 June 2023 31 October 2023 $2,000,000 shares of $0.5 each Bonus issue made of 1 for 4 Right issue of 1 for 3. Rights price was $2.0 and the market value was $6.00 per share Havuuta Limited also had the following changes during 2023: 30 June 2023 31 August 2023 31 July 2023 Convertible preferred shares: 20,000, convertible into 5 shares of common stock of each and paying dividend of $20 per share |$2,000,000 of 10% convertible loan, convertible into 3 ordinary shares per $5 of loan in the next five years Stock options: 50,000 with the exercise price of $5 (Average market price of company shares during the year was $6 per share) Earnings for the year ended 31 December 2022 were $5,000,000 after tax Earnings for the year ended 31 December 2023 were $5,000,000 after tax The tax rate was 40% Required: Compute the basic EPS and diluted EPS for both 2022 [6 marks] and 2023 [7 marks]. For consistency, the beginning number of shares in 2023 is based on the weighted number of shares in 2022. All the financial instruments are dilutive.

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