DJ Co Is a Calendar-Year Firm with 120 Million Common Shares

Essay

DJ Co. is a calendar-year firm with 120 million common shares outstanding throughout 2018. As part of its executive compensation plan, at January 1, 2017, the company had issued 12 million executive stock options permitting executives to buy 12 million shares of stock for $10 each within the next eight years, but not prior to January 1, 2020. The fair value of the options was estimated on the grant date to be $3 per option. The stock options qualify for tax purposes as an incentive plan. The company's net income was $480 million in 2018. Its income tax rate is 40%. The average market price of the stock during 2018 was $12 per share.
Required:
Determine basic and diluted earnings per share (rounded to two decimal places) for DJ in 2018.