Step 1 – calculate the Number of shares issued in 2008
Earnings per share = Pre-tax profit / Number of shares issued
1.2 = 9,000,000 / Number of shares issued
Number of shares issued = 9,000,000 / 1.2 = 7,500,000
Step 2 – calculate the Number of shares issued in 2006
0.85 = 8,500,000 / Number of shares issued
Number of shares issued = 8,500,000 / 0.85 = 10,000,000
Step 3 – Calculate the difference
7,500,000 - 10,000,000 = 2,500,000 less
Thus the correct answer is 2,500,000 less